Seat 1 Dealer Issue

[jnalpak]

What is the correct call in this case:
this just happend in a club around the way during a NL game...

hero is SB.
MP+1 raises and its called by MP+2 and BUTTON
HERO raises it up 5x the bet, BB fold and he gets two callers. Dealer grabs the chips and takes HERO's cards into the muck as well.

The cards are well in front of everyones view since it was grabbed by the dealer and HERO yells STOP halfway to the muck. HERO says he knows his two cards DONT MUCK THEM since I RAISED.

Dealer says he cant do anything about it and is about to continue play, but the table collectivly calls for a Floor Manager. As the floor mgr is called over dealer takes the almost mucked cards mutters something under his breath and MIXES them into the bottem of his deck.

Floor manager says there is nothing he can do and gives him back his raise and he loses his SB.

was this correct?
was the dealer a douche or made the correct decision?

thanks