While I don't doubt that you had no negative intentions in what you did, you still went about it in possibly the worst way you could.
First I want to state for you and anyone else reading this that staff take reports of exploits very seriously regardless of whether we can see it happening or not. It it never necessary to do an exploit on your own to report it. If a tech asks you to do it as part of investigating it that's one thing, but don't just do it purposely on your own.
I'm going to lay out the timelines of events here: You inform Hollifer that you've discovered an exploit and show her the hacked item. When she asks you what the exploit is, you say you're going to tell Dumbo about it. When the asks you again, you say "I want the credit of letting Dumbo know". Holli removes the item from your inventory and kicks you telling you not to not to use whatever exploit you're using. You use the exploit again, you're kicked again, then rejoin and leave for P. On P you talk to Pez about the situation, but say you're waiting to tell Dumbo about the exploit. Holli joins and messages you to try to talk to you and you ignore her and go back to C. On C when she attempts to talk to you again you keep brushing her off. Holli gives you a warn, saying that if you use the exploit again you will be banned. You begin to describe the exploit to Dumbo who has just logged in, who tells you that you shouldn't have actually brought the item into the game. You then state "I didn't/won't abuse this for personal gain, and yet I still got a warning for it, which I won't acknowledge" (emphasis mine). Shortly after this you are banned for using the exploit again to get the item to show Dumbo.
There are so many points in there series of events where if you had just listened to what Holli was telling you to do you wouldn't have been banned, warned, or even kicked. When she asked you what the exploit was, you should have told her, not held back because you wanted to score brownie points with Dumbo by being the one to tell him about it. When she removed the item from your inventory and told you not to use that exploit, you should have listened, especially after the second kick. When she warned you and told you you'd be banned the next time you used the exploit you should have acknowledged the warn and stopped using the exploit. Even now, after being banned for doing something you were told would earn you a ban, you fail to see that you might have been in the wrong.
Ignoring direct instruction from staff so many times in a row would be enough for almost anyone to issue a ban, however Hollifer was going to let you off with just the warning until she discovered you were holding onto a hacked-in instadeath splash potion another player had brought onto the server months ago. There's no reason for you to have that, and as a long time player on this server you definitely know better. Having that also casts doubt on whether you would have used the exploit you found to bring more items like that onto C.
Thinking that you might not be taken seriously if you didn't have the hacked item to show to someone was okay. Repeatedly ignoring an admin telling you to not hack in items, ignoring messages, kicks, and warnings, was not. It concerns me you won't acknowledge that ignoring repeated direct instruction from a staff member was wrong. I'd like you to read over what I've written here and think about the situation. Then I want you to tell me if you still think that Holli is in the wrong here.