I am guessing you have never been a Stay-at-home mom? I worked there in a position that had many more hours/week before the birth of my youngest child. Then I reduced my hours. Lots of people do this - I don't think it's that hard to understand why I would do that. I work on a Saturday - when my DH is home with the kids and we don't have to worry about child care. Now that my little one is going to school in the fall, I am in a different situation.
Since there is a policy in our company that internal applicants get an interview, it's really that HR made a mistake. Sure, they could want a specific person in the position, but they would have had to jump through the right hoops before offering to said person. They messed up. I am not a lawyer, and I don't plan on consulting one at this point, but I do believe I would have a case here since I was supposed to be given an interview as long as I met the minimum qualifications for the job. I wasn't given that, and lost an opportunity. HR admitted to their negligence.