I understand that distributions cannot reduce AAA below 0, but AAA and Retained earnings are not one in the same. Though they more than likely should closely mirror each other.

Distributions can be in excess of Retained Earnings and Retained Earnings can be less than 0, whether they should be from the perspective of how one runs their business is a different matter. If this was not the case then, the balance sheet for tax purposes and book purposes would be different.

Is this just an instance of accounting standards and tax law clashing and ProSeries is erring on the side of safety and preventing the balance sheet from showing a debit balance from distributions due to the limitation imposed on AAA?