Are we talking about firing a 20 gauge cartridge with a 28 gauge cartridge in the barrel, or simply firing a 28 gauge cartridge in a 20 gauge barrel? (As I recall, a 28 gauge cartridge will go into a 16 gauge tube, but not a 20 gauge tube.) In the latter case I would expect no damage to the barrel although if enough gas leaked back it might harm the action. Could the "ring" he is seeing be the forcing cone?
As for why the barrel will blow with a plug at the muzzle, remember we are not talking about static pressure here, things are happening fast. When the gas reachs the muzzle it's traveling at a very high speed and piles up behind the obstruction. Think of how the plumbing may knock when you when you shut off a faucet suddenly.
