The interpretations at the end are a key factor. But also Redding guides are also widely used.
Indeed it was. As I noted, PI restrictions for the offense start at the snap. The officials don't know where the ball is intended, and a block downfield, while seemingly away from they play, does have an impact. Both in terms of the D reading the play (i.e. if they see someone blocking downfield, they assume a run) and in terms of guys "popping open" suddenly. I can almost guarantee that the official that threw the flag didn't consider that the ball was nowhere near the PI, only that the ball crossed the LOS and there was apparently intentional interference with the D.
It is an officiating philosophy that is taught starting as low as junior high football. I've been a HS official for nearly 20 years, and we've always had this philosophy. Holding is only a factor at the point of attack. You can find plenty of associations that teach this. Here's one quick one:
https://www1.arbitersports.com/Groups/107475/Library/files/Football/NCOA_Football_Philosophies.pdf
And plenty of others.
As far as Pac-10/12 officiating blunders go, this is nothing. The '02 Apple Cup, as far as I'm concerned, was the worst blunder ever. Perhaps the officiating at Tennessee was worse. But his OPI call was, IMO, "Meh."