There is only one legal choice here. It's an IW, rekick, and the U buys the post game beverages.
And the R didn't know what to do?!?!?! You need a smarter R.
Wouldn't happen here, the U is with the kicker and has no idea what's going on down at the 1. That's not to say another official couldn't make the same mistake, but it wouldn't be the U.