I got grouped up with someone that I had ignored in the past and reported for being a negative player and trashing the rest of our team. How is this allowed in the matchmaking system? Matching me up with someone I have on my ignore list and that I reported?

Consider the alternative; that reporting anyone who does not play well will result in a higher EV for all future games.

Keep in mind, Riot just cleared up a bunch of names, and a lot of people bought the rights to those names. In theory, it is possible, and plausible, that someone else is using that name again. As for them being a dumb troll, well, coincidence happens.