Frozen funds remain frozen, until they are unfrozen.

So mechanically Tether pockets the difference, unless they unfreeze. But as a matter of accounting, because of the unfreeze capability, the liabilities of the frozen Tether stay on the books. So they can't just spend the money. It also makes it hard for Tether to compensate the victims from the frozen funds.

The alternative would be to let Tether burn funds, but that is highly problematic for well intentioned users. Because a freeze can be challenged in court and reversed. A burn cannot.

I would assume Binance is powerful enough to get Tether to issue new USDT and give it to Binance to replace the stolen-and-frozen USDT.

No lol