ASSORTED REFEREE MISTAKES

Question:
A coach relayed an incident to me this morning:

Summary:
Loose ball in the box in front of Woodbury goal. Referee blows whistle, having seen a handball. The Woodbury goalie hears the whistle, stops playing. A Watertown player shots and scores. Referee allows goal; begins setting up for kickoff. Upon questioning, referee says he allowed advantage to play out. Woodbury argues misblown whistle, so referee waves off goal and conducts penalty kick.

Obviously Watertown now questions awarding and disallowing of goal.

Questions: Is it correct that: 1) if the referee was going to allow advantage to play out, he should have not blown the whistle; 2) if the kick came less than a second or two after the visual on the handball, the ref should have waited to see if the ball went in and whistled the handball only if it had not gone in; 3) if the ref blew the whistle, even though a shot was happening, or about to happen, the correct thing is to award the PK?

USSF answer (May 23, 2011):
Yes on all counts.