From an officials perspective: The error was in the signal. Otherwise the play could legally proceed as it did. I’ll explain both the rule and the error.
A kicked ball is dead when it is POSSESSED by the kicking team (we call that downed), or when it has come to rest and no one attempts to possess the ball, ie, it just sits there. The bean bag is thrown to mark the location of first touching, (there can be more than one first touching spot because it simply marks a spot where the kicking team touches if it’s needed later), not to mark the “downed” spot. The reason? No matter what happens to the receiving team (for example, fumbling later during the return), the receiving team always can choose to take the ball at the spot of first touching.
Now, getting to this play after the ball was touched and left to sit. There is no rule about how long it has to sit before blowing the play dead as downed. But no one can be making a play on the ball. In this case, the back judge was ready to declare it dead, since he waved his arms (major error). He should have blown his whistle hard at that point. If he is waving his arms, blow the whistle so hard there is no question, and keep blowing it if the play continues.
I mentioned that without the error, the play you saw could certainly be possible. If the ball only sits for a second and a player makes a move on the ball, then no reason he couldn’t pick it up and return it for a TD like he did. It’s a judgement call as to how long it can sit.
The huge error here was on the back judge. Don’t wave your arms without blowing the play dead. I heard someone else say that another official actually blew his whistle. To me, that’s cowardice. If you blow a whistle while the play is still going on, declare an inadvertent whistle on yourself and rule accordingly. There are rules for how to handle it. If you saw the play dead, blow your whistle and stand by it.
So, the “too long did not read” answer, the play was legal as shown if the refs had “let it play”, but should have been stoped immediately on the waving of the arms by the back judge.
Should the refs be canned? Maybe? I don’t fault refs too much for misjudgment on the fly. But I REALLY fault refs for making mistakes in application of the rules. You have time to talk about it in a huddle and decide. There is no excuse for mis-application.