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It also seems like a strange ruling

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FYP

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What should the correct rule be? The floor person had to come back to the table later for something else, and said he had verified that their ruling was correct.

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I think the floor got confused here and misapplied a common ruling from a similiar situation. It is my understanding that some rooms will apply the rule in this way. If a player who is facing an all-in bet (with no further action to come) exposes his hand "to get a read" no penlaty will be imposed if he folds (essentially they are folding face up which never gets a penalty) but will impose a penalty if the player calls. Notice the difference between this where the player who exposed his cards is the one who decides if he calls or folds, and the situation posed by the OP in that the decision to call or fold was to be made by another player.