As far as I can tell, Web of Trust doesn't rely on Trust being *strictly* transitive, just weakly transitive, like the term "nearby" is weakly transitive.
(When I lived in Chicago, I was "nearby" some people, like my neighbors. My neighbors were also nearby people, that I was transitively nearby. But if we extend that far enough, we eventually hit people who, despite there being a chain-of-bacon from me to them, I was not transitively nearby myself.)