Sounds like the break-away did exactly what it was suppose to do. It kept the breaks engaged on the trailer. Of course, the trailer wheels just turn, the tow vehicle wheels have power behind them, and can over come locked up trailer wheels.
If a separation between tow vehicle and trailer occurred, the trailer brakes would have stopped the trailer rather quickly. But your tow vehicle kept forcing the thing to move, thus overheating the breaks, causing the dust, and finally failure. You are extremely lucky the trailer breaks did not catch fire from dragging it so long.
I don't think this is a manufacturer issue, rather a user issue. When you first noticed the extra drag on the trailer, it should have been inspected closer right then.
My trailer breaks do not "lock up" my trailer wheels. The sheer weight of the trailer in motion is too much for breaks to "lock up".
I once pulled my break-away cable and re-inserted it. I then proceeded to hitch up and move the vehicle. Although I could move the vehicle, it was the most stubborn attempt I'd ever encountered. I immediately checked the break away cable, pulled it again and reinserted it. The brakes freed-up then. The trailer rolled normal again.
I think it's user error on this one. But .... don't take my advise. It's still worth checking with your dealer. Maybe they will determine the breaks should have been adjusted tighter or something. You just never know how they will respond.
