> how is it that state employees (Washington, California) are "co-employed" by an organization to do _exactly_ the research that their home universities work on

They will work part-time for the university, and part-time for Facebook. I don't see why that's so shocking? Presumably the university only funds them part-time for part-time work, so it's not like they're not getting what they're paying for if that's what you're asking. This is a very conventional set up for academics.