That was just a CPO2 doing his own thing. He wasn't alone though. I saw several people do it (including some senior officers), although they were usually former RCN personnel (hence the reason you don't see it anymore). It was never approved at any level. I remember the Log Branch Advisor pointedly reminding everyone at a Log Officer gathering that only the Log badge was authorized - you could almost see him choking back the rage as he stated that he had had to personally remind some pretty senior folks about that. I thought that was a tad interesting considering that as a BGen, HE didn't wear the Log badge! And now Army colonels don't either. In summary, with the exception of Army colonels, Log Branch personnel must wear the Log badge. CWO/CPO1s and officers are permitted to wear the higher quality bullion/composite badges at personal expense.
It is interesting to note that when we first introduced the DEU, VAdm Wood (then Comd MARCOM) stopped wearing the General Officer badge and wore a Naval Ops badge with his new blue uniform. His fellow flag officers never copied his example to the best of my knowledge.