Update Cart Quantity Allows Overbooking

I'm not sure of the proper solution (and this solution seems inefficient), but here is the code I used to solve the problem. Sharing in case it is of use to somebody and also in hope that someone might be able to improve it.

Disclaimer: this is the first drupal module code I've ever written.

<?php
/**
 * Implements hook_commerce_cart_order_refresh().
 *
 * Alter the line items to make sure we are not overbooking a registration prod 
 */
function mymodule_commerce_cart_order_refresh($order_wrapper) {

  if (commerce_cart_order_is_cart($order_wrapper->value())) {

  // Keep an array with the sum of qty
  $qty_sum  = array();

  // Keep an array with the list of potentially overbooked line items
  $overbooked_prod_id = array();

  // Keep list of Warning Messages
  $msg_array = array();

  // ** First Pass:  
  // Make sure individual line items do not exceed available registrations

  // For each of the line items in the order
  foreach ($order_wrapper->commerce_line_items as $delta => $line_item_wrapper)
   {

     if (!in_array($line_item_wrapper->type->value(),
                commerce_product_line_item_types())) {
      return False;
     }

     // Get the line item  so we can work on it
     $line_item = $line_item_wrapper->value();

     // Gets the quantity of this line item in the cart
     $qty = $line_item_wrapper->quantity->value() ;

     // Gets the unique product id for the line item
     $product_id = $line_item_wrapper->commerce_product->product_id->value() ;

     // Attempt to get registration settings for this product
     $settings = registration_entity_settings('commerce_product', $product_id);

     // Check if this product is registration enabled
     if (!empty($settings) && $settings['status'] == 1 )
     {

       // For this product id, see how many are available
       $capacity = (int) $settings['capacity'];
       $filled = (int) registration_event_count('commerce_product',$product_id);
       $avail = $capacity - $filled;

       // If the line item qty is more than available, set the
       // line item to 1 to avoid over booking
       if ( $qty > $avail )
       {
         // Set line item qty to 1
         mymodule_set_line_item_qty( $line_item, 1.0 );
         if (!array_key_exists($product_id, $qty_sum))
         {
           $qty_sum[$product_id] = 1.0;
         }
         else
         {
           $qty_sum[$product_id] += 1.0;
         }

         //  Display a warning message.
         $msg_array[$product_id] = "There are only  {$avail} available slots for {$line_item_wrapper->commerce_product->title->value()}.  Please adjust your cart quantity." ;

       }
       else
       {
         // Let's add up the sum of all the same products in the cart
         // needed since  disabled the 
         //'Attempt to combine like products on the same line item in the cart.'
         if (!array_key_exists($product_id, $qty_sum))
         {
          $qty_sum[$product_id] = $line_item_wrapper->quantity->value() ;
         }
         else
         {
          $qty_sum[$product_id] += $line_item_wrapper->quantity->value() ;
         }
       }


       // Check if the sum in cart would result in overbooking
       if ( $qty_sum[$product_id] > $avail )
       {
         $overbooked_prod_id[$product_id] = True ;
       }



     } // if settings

   } // for each line item



  // ** Second Pass:  
  //  if Sum of line item quantities would cause overbooking
  //   First try setting all of those products quantity to 1
  //  then re-check qty sum.  if still exceeds, then remove line item

  $qty_sum  = array();   // reset

  // For each of the line items in the order
  if(!empty( $overbooked_prod_id))
  {
   foreach($order_wrapper->commerce_line_items as $delta => $line_item_wrapper)
   {
     // If this line item product id is in the overbooked array, set qty 1
     $line_item = $line_item_wrapper->value();

     // Gets the unique product id for the line item
     $product_id = $line_item_wrapper->commerce_product->product_id->value() ;

     if ( isset($overbooked_prod_id[$product_id]) )
      {
         // Set line item qty to 1
         mymodule_set_line_item_qty( $line_item, 1.0 );
         if (!array_key_exists($product_id, $qty_sum))
         {
           $qty_sum[$product_id] = 1.0;
         }
         else
         {
           $qty_sum[$product_id] += 1.0;
         }

         // For this product id, see how many are available
         // Attempt to get registration settings for this product
         $settings = registration_entity_settings('commerce_product', $product_id);
         $capacity = (int) $settings['capacity'];
         $filled = (int) registration_event_count('commerce_product',$product_id);
         $avail = $capacity - $filled;

         // Warning Message
         $msg_array[$product_id] = "There are only  {$avail} available slots for {$line_item_wrapper->commerce_product->title->value()}.  Please adjust your cart quantity." ;




         // Check if the sum in cart would result in overbooking
         // This time, we remove it.
         if ( $qty_sum[$product_id]  > $avail )
         {
           // Delete the line item
           // do not need to save order, as done after the hook for us
           commerce_cart_order_product_line_item_delete(
            $order_wrapper->value(), $line_item->line_item_id, $skip_save=TRUE);
            //$order_wrapper->value(), $line_item->line_item_id );
           $qty_sum[$product_id] -= 1.0;

           // Warning Message
           $msg_array[$product_id] = "There are only  {$avail} available slots for {$line_item_wrapper->commerce_product->title->value()}.  Item was removed from  your cart." ;


         }

      } // if isset overbook prod id

   } // for each line item
  } // not empty overbooked prod id array

 // Display warning messages for any products that were overbooked
 foreach ($msg_array as $msg)
 {
   drupal_set_message(  $msg  , 'warning', TRUE);
 }

 } // end if is order

}




function mymodule_set_line_item_qty( $line_item, $qty )
{

     // force the line item quantity
     $line_item->quantity = $qty;

     // Save the updated line item and reset cache
     commerce_line_item_save($line_item);
     entity_get_controller('commerce_line_item')->resetCache(array($line_item->line_item_id));

}


?>

Probably a good idea to add a check to verify if registration is possible as a third pass.

For example:

<?php
  // ** Third Pass:
  // Verify if registration is possible
  // We have already checked capacity, check open/close dates and reg status
  // if not available, then remove

   foreach($order_wrapper->commerce_line_items as $delta => $line_item_wrapper)
   {

     if (!in_array($line_item_wrapper->type->value(),
                commerce_product_line_item_types())) {
      continue ;
     }

     // Get the line item  so we can work on it
     $line_item = $line_item_wrapper->value();

     // Gets the unique product id for the line item
     $product_id = $line_item_wrapper->commerce_product->product_id->value() ;

     // Attempt to get registration settings for this product
     $settings = registration_entity_settings('commerce_product', $product_id);

     // Check if this product is registration enabled
     if (!empty($settings) )
     {
      $status = $settings['status'];
      $open = isset($settings['open']) ? strtotime($settings['open']) : NULL;
      $close = isset($settings['close']) ? strtotime($settings['close']) : NULL;
      $now = REQUEST_TIME;

      // remove line item if not open
      if ($status)
      {
        // check open date range
        if (isset($open) && ($now < $open)) {
          $status = FALSE;
        }
        // check close date range
        if (isset($close) && ($now >= $close)) {
          $status = FALSE;
        }
      }

      // Delete the line item
      if ($status == FALSE )
      {
       // do not need to save order, as done after the hook for us
       commerce_cart_order_product_line_item_delete(
            $order_wrapper->value(), $line_item->line_item_id, $skip_save=TRUE);

       // Warning Message
       $msg_array[$product_id] = "Registration is not available for {$line_item_wrapper->commerce_product->title->value()}.  Item was removed from your cart." ;
      }

     } // if settings


   } // for each line item
?>