Some of my pictures awaiting validation got blue dot icon which according to legend is free collection. What is going on, they put them in free collection without my permission? I deleted all model released photos immediately when I noticed this.

I suggest you should contact support.

I'm not sure but there could be an option there where you agree that refused can be considered go into free images.
It's worth checking your account options.

It is a bit too easy to click the free section agreement by mistake.  I wish there was an opt out, so that option wasn't available every time I submit.

My suspicion is that they got a bug. When you submit video there are two radio buttons and the bottom one is for extended license. If immediately after that you submit a photo bottom button will be still checked and if you did no notice that you are sending to free collection.