IB has a lot of retail clients that would use smart and have 100% fill ratio, while a pro trader might have a 25% fill ratio. If your ratio of retail to pro is high enough, your route would incur no cancel fees because your overall fill ratio would exceed 50%.
I am pretty sure that the scenerio you described is going to result in a charge of $501...
The rule only punishes routes used by pro traders; ma and pa should mask the order flow of a retail broker like IB ...