SB dealt 3 cards; dealer plays 3-card monte to determine burn card...

[Pov]

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SB's hand is dead on top of the burn 3 card monte. Do NOT announce the burn card.

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Obviously the way the dealer fixed it was horrible, but do you really think this is the best way to handle the situation? I think it should have been a misdeal if SB mentions the problem at least by the time action is to him. Why should he be punished by not having a hand because of the dealer's mistake?

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It's not a misdeal, his hand is just dead. If he'd seen the 3rd card and said something before looking, the dealer could have just pulled the card back and put it back on top of the deck, but as soon as he ruined the identifiability of the card (or looked at it) his hand was dead and he's out his SB money.