My understanding is that this leads to short interest greater than 100% but not more shares traded than float as there is still just one share. In your example

My understanding is that this leads to short interest greater than 100% but not more shares traded than float as there is still just one share. In your example Alice doesn't own the share at this point, she owns an agreement that says she will be returned a share in the future and is paid interest on it in the meantime.