From the Sherdog.net forums :

A lot of speculation on this and none of it is right. Here's what happened. At 9:30 AM Nick informs me that he is having trouble making weight. Speculated that after accidentaly ingesting salt water on an ocean swim he had gotten sick and was finding it hard to cut the remaining last few pounds. Nick takes great pride in being a professional and has always made weight in his mma career and grappling tournaments so this was really bothering him. A couple of hours later he is at 167.5 and it is obvious he is not making the weight. I figure at best he could make 164 but then he would be exhausted and still fined by EliteXC. Better to stay where he's at.

Nick on his own reaches out to Mushin and his camp and explains the situation. Apologizes and asks to make it at the next weight up and offers to compensate from his purse. They agree and after explaining the situation to EliteXC everyone agrees. If Nick had weighed in over weight the fight would still have happened regardless with Nick losing probably anywhere from 10-12% of his purse. This way Nick paid out of pocket more than that and Mushin will receive more money than his fight purse. That's why Mushin came in over the weight also.

Again, Mushin is being paid a significant sum directly from Nick's fight purse. Since Mushin agreed should there really be an issue over this?

Should this be taken at face value?  If so, looks like Nick handled it as professionally as possible.  And technically didn't come in overweight if this had been agreed to before the bout.