I took Driven's advice and reached the SU folks. They confirmed the direction of this thread:
"As you may know, network licenses of SketchUp Pro no longer revert to the free version when you have exceeded the use of your allotted amount of network seats.
Each situation is different and there are always different ways of satisfying each individual need.
You have the option of adding additional network seats which would give you more room -- as well as more users -- to operate on your existing network.
You may also be interested in converted your two-seat network license into two individual licenses; individual licenses allow you to run multiple instances of SketchUp Pro on the same machine without receiving the error message you're receiving now."