Was Habibul Bashar actually out?

The 38th match of the Cricket World Cup 2007 proved to be an interesting encounter. Interesting in many ways; Bangladesh's batting disappointing, their bowling almost succeeding in making up for the matting mishap and England going on to win the game.
But there was a supposed umpiring blunder in that match which has gone unnoticed. Habibul Bashar popped a simple catch to Michael Vaughan. He dropped it and went on to throw the ball to Paul Nixon who ran Habibul Bashar out when he was on his way to the pavilion, assuming he was out. He was given out. Could this actually be not out?
Law 27 of the game of cricket deals with appeals. It describes the manner of appealing, that an appeal is required for a dismissal, etc. One of the clauses (clause 7) under this law also states that an umpire shall intervene if satisfied that a batsman, not having been given out has left the wicket under a misapprehension that he is out. The umpire intervening shall call and signal dead ball to prevent any further action by the fielding side and shall recall the batsman.
This implies that the English fielders could not have run Bashar out. That a dismisal occurred in such a manner is surprising and that it went unnoticed is also equally surprising.
The only point siding the English could be the interpretation of the law. But, Tom Smith's Book of Cricket Umpiring and Scoring (a reputed and recognised text book) has interpreted the clause in such a manner that this dismissal is in fact not out. Have Mr.Taufel and Mr.Bucknor made a mistake?-BS