There is a problem with Social Security Numbers used for identification: the number is not necessarily unique to an individual. There are people out there who lawfully have the same social security number.
Additionally, there are number sequences not yet assigned.
Consequently, can a person use made-up social security numbers to obtain various identification documents and be operating under the presumption that the identity so created does not match another person's identity? Yes, it is possible.
From what little information is contained in the article, I have to agree with the court. Basically, the defendant was charged with the wrong crime, or perhaps a superfluous crime. He committed several counts of fraud, certainly, but, depending on how his documents were obtained, it is not certain he "knowingly" stole another person's identity, which, according to the article, is an essential element of the statutory offense of identity theft.
For a conviction to be just, the defendant has to be shown to have committed the crime charged, and that means proving all the elements of the crime. If prior knowledge is an element of a crime per statutory law, then prior knowledge needs to be shown, and, absent evidence to support prior knowledge, the legally correct verdict for such a charge would be not guilty, even if the same body of evidence is sufficient to convict of other, similar charges.