So what?
You've just described a correct challenge - that's a feature, not a bug.
EDIT: Hadn't seen the Palace clip and misunderstood the series of events. The point is, no one is saying this gets 100% consistency (which is impossible), but Kav would be more empowered to make either decisions at the screen. Instead what happens is he's got another ref telling him it's a clear error and even though he clearly doesn't think so, he now has to have an incredibly high bar on disagreeing with them, so he just goes with the red.
Under a challenge system, it would be up to Palace to identify that as a missed red and call for the review, at which point he'd be a lot more able to go "nah, but I do think I probably missed a yellow there so we'll go with that" and everyone is much happier. I know he can do that in law currently, but it's so rare it may as well not be there - a challenge system changes the bar significantly.