***Update***
Well the mystery has been solved as to why my tank reached 96-97 degress even with the RKE controlling it.
While doing some experiments in order to re-create the diseaster and determine what had failed, my husband realized something and then everything made sense...
None of our Equipment (RKE, PC4, TEMP PROBE or JALLI HEATER) had failed at all. In fact they had all done their job perfectly or in my case a little too well !!! Unfortunately human error was to blame...
In re-creating the scenario in a bucket my husband realized that during the actual tank fiasco he had felt the water and it was very hot, he looked over at the RKE and it was not showing the temp as the temp probe was out of the sump, he placed it back in and read the 96-97 temp. (With all the stress and crazy running around to deal with the dead fish and trying to save the few left he didn't even realize that he had put the probe back into the sump until now.) Pat feels just awful and guilty about the diseaster.
So basically here is what we figure happened on Tues... Pat had changed the sock in the sump and when he put a 5g bucket next to the sump, it must have tugged on the temp probe sensor and popped it out of the sump. The temp probe continued to read our air temp which was most likely a little below 78* and therefore the RKE told my heater to kick on. The temp in my house probably never got above 79* since it was night time, therefore the RKE never told my heater to shut back off. Pat found all the fish dead and the hot water around 7:30am on Wed.
So that my fish did not die in vain, I would like to throw out a couple of possible requests/suggestions/solutions to help avoid others from having this problem in their tank. 1. Maybe the temp probe could come with a suction cup to help keep the sensor wire in place. 2. Maybe the sensor itself could have an upgraded feature that can tell if it is located/reading in a fluid (IE-Water) or if its in/reading air.
3. Now this would not have helped in my circumstance but, maybe the RKE could come with an audible alarm/siren internal or external that can be heard like up to 20 ft away for emergency purposes. For instance, if water temp reads below 75 or above 86, PH range high or low, etc based on what the consumer chooses. (Again, this would not have helped me as my temp was reading within normal parameters other then being a little below 78* probably.)
Again, thanks to all for your kind words! It is very hard to accept that our diseaster was our fault especially when those who now us and our fish tank know how beloved they are to us and how well we try to take care of them.
Again, MYSTERY SOLVED!!!