And if the clock was running, that would be the correct call.
7-2-4-6: Shift Converts to False Start. With the game clock running after the two-minute warning of either half, if all 11 offensive players are not set simultaneously for one full second prior to the snap, it is a false start. If all 11 players get set, and then two players shift without resetting prior to the snap, it is a live ball foul for an illegal shift.
Since the clock was not running, I think Illegal Shift was probably the right call. But I still don't think that they were right to stick with it, when at least one official was clearly killing the play before a recovery occurred.
Like when they kill a play and the QB throws the ball into the ground so no one hits them, are they supposed to allow that dead ball to become a live ball if it should have been an illegal shift and call that an incomplete pass or a fumble?