If the ref decided he was only playing in a dangerous manner eg high foot or studs up and no contact was made with a player then it is only an Indirect free kick, regardless of in or out of the penalty area.
If on the other hand he kicked or tripped an opponent then yes the ref got it wrong and should be a direct free kick or penalty if in the area.
So was contact made?
If the ref decided he was only playing in a dangerous manner eg high foot or studs up and no contact was made with a player then it is only an Indirect free kick, regardless of in or out of the penalty area.
If on the other hand he kicked or tripped an opponent then yes the ref got it wrong and should be a direct free kick or penalty if in the area.
So was contact made?