Here's an update on my own situation: The Tax Advocate advised me that the IRS declined my Form 8888, which it flagged as possible Identity Theft due to (1) my large total refund, and (2) the fact that this request was inconsistent with how I had chosen to receive my refunds in previous years. She went on to say that she had received several similar claims from other taxpayers.
Unfortunately, she does not know why the IRS did not notify me and thus give me a chance to prove my identity, but instead just did a direct bank deposit of the gross refund. She further advised that there was nothing that could be done at this point to rectify this.
I will say that my experience with the Taxpayer Advocate was a friendly, professional, and timely one; although the outcome was other than I had hoped for. Reading between the lines, it sounds like the IRS wasn't prepared for the increased Savings Bond demands due to the unusually high interest rates and extensive publicity re using tax refunds to purchase them. As a result, their existing checks and balances to weed out fraud caught some of us innocents!
