Duffen, who led Hull to promotion to the Premier League in 2008, departed the club following an acrimonious legal dispute with previous owner Russell Bartlett three years ago.
But the 54-year-old was back in the directors box for Hull's 4-2 defeat at Palace, sporting the Tigers' club tie, after being offered the hand of friendship by the current owners.
Duffen said: "After all that I endured after leaving Hull under the previous regime, this has real resonance for me.
"It is the new Hull owners, with whom I have a very good relationship, acknowledging that I did nothing wrong in my time at the club and welcoming me back into the fold. It's a wonderful gesture."
Duffen, who agreed a settlement ending his dispute with the club's previous regime in February 2010, is keen to get back into football and would not rule out a return to the KC Stadium.