Why should he be able to keep it? That just made no sense. He's out but not the idol. The idol should have been left in the game. Also, agree that the production crew just threw together the merge at the last minute which also made no sense. They had just had a tribe switch so why another one so soon? No, no sense in having the merge at this point. And what was with Colton sitting there all healthy giving his confessional to the camera about being ill? Either he didn't have an appendicitis attack or something else happened we don't know about. No one else has had a confessional after being carted off. Nothing made sense this episode. Even Kat made no sense as no one could be that stooooooopid.
I would say he was not told he could not give it away. Alicia similar pretty ticked off at him for not giving her the II. If they had told him “No” she would have been more “Oh, well”.
As to him sitting there - I looked and it appeared he was cleaner than he was when medivaced. I’d say they took his cloths at the hospital and put them back on him a few days later and set him in a place with a matching green background.