This wouldn't be a tough one at all for me. They guy's offering was not in the fish's mouth. The fish didn't strike at his lure. His lure happened to get snagged in a line that happened to be attached to the fish -- really no different than if his line had happened to get snagged in a line that happened to be attached to a fin, or if his itself had happened to get snagged directly on a fin.

That said, I realize other folks' interpretation, or moral code, may differ from mine, and I wouldn't become too upset about his keeping the fish.

I once kept a fish under similar circumstances. I hooked a king, felt a head shake, and knew it was hooked in the mouth. I brought it in and bonked it, only to realize seconds later that my line had hooked a tangle that was connected to his mouth. Felt bad about it, but it was too late. Obviously, I'm more careful now.