The recipient is anonymous under the DPA unless a DPA Disclosure Request was submitted by the police, as I understand it - I may be wrong there. Your first argument regarding the recipient's income is a logical/moral viewpoint rather than a legal one but might be considered by a court, yes...
Not exactly what I mean, no - it's not theft because that implies action on the recipient's part to deliberately intercept/redirect the funds. It comes under a principle of common law rather than a specific statute, so it's extremely difficult to define and therefore open to interpretation...
Because its a building society, not a bank. Many only have 1 account for receipt of payments, and re-route to their customer with the roll/reference number. Others have no BACS capacity so they use a high street bank (barclays/hsbc etc) to forward the monies. If the details entered in error...