There is another possible take on this question (I don't know the actual answer):
The Board says that anyone who seriously underperforms in the HSC in relation to their internal assessment is taken out of the moderation process.
In your scenario, you definitely fit this category.
So if they take you out, there is only one student, so his assessement mark will be equal to his exam mark.
Then when they slot you back in, you will get an assessment mark somewhat higher than 85.
(However you keep your 65 for the exam component)
Whatever method they use, the handling of assessment marks in very small cohorts seems very haphazard.