This sounds like a horrible idea. Why would they do this? One would assume that the regulations are in place for a good reason.
It is not a horrible idea, it is a perfectly safe and practical idea that does not in any way break any regulations.
It is legal to fudge the destination before take-off using theoretical figures?
Since we are talking about safety are there any other regulations being broken that we need to worry about?
Nothing is being fudged as you put it and no regulations are being broken.
A made up example.
The aircraft is required to carry a fixed fuel reserve, let’s say 45 minutes, a variable reserve of 15% plus fuel for the approach, let’s say 10 min.
Say a flight from A to B is going to take 240 minutes. This means they then need to carry 331 minutes of fuel if the weather is ideal. I.e. 240+45+36+10
If the weather is less than ideal they may need to carry 30 or 60 minutes of holding fuel
or they may need to carry fuel for a diversion to an airfield with a better weather forecast.
This can be further complicated by the holding fuel being calculated at the rate it would be burned for holding which may be considerably less than that used for cruising but the diversion fuel is obviously calculated at cruise fuel burn.
Say for example the alternate aerodrome is 80 minutes from the original destination they then need an extra 102 minutes of fuel. So now they are carrying 433 minutes of fuel for a 240 minute flight. For an airliner an extra 193 minutes of fuel is a lot of fuel and consequently a lot of weight.
If the aircraft can only carry 400 minutes of fuel when fully loaded but its maximum capacity is 420 minutes of fuel they can offload passengers or freight to the weight value of that extra 20 minutes of fuel. How they determine this will depend upon circumstances.
Now having 420 minutes of fuel they are, in theory, still 13 minutes of fuel short of having enough fuel to make their alternate. In this case they can plan to an airfield nearby and update as they go or even plan to a point where they still have enough fuel to return to the departure point, or somewhere else, and update just prior to that point. In this example if they recalculate their fuel after they have flown 120 minutes they now only need 120+45+18+10+102 which is 290 minutes plus the 120 already burnt which now means they have enough fuel.
The numbers I have used are totally made up for this example and have no relationship with any real aircraft.
A good example of all of this is the C130A which the RAAF had many years ago could not, in theory, fly from Darwin to Butterworth (Malaysia). However by planning to the point of no return and updating the fuel calculations as they went they could make the trip without issue.
I know this all sounds complicated but it is a real type scenario the sort of which happens regularly as aircraft are pushed toward their design limits...