Yet another Floor Decision question (the magic muck)

[KurtSF]

I can't remember the exact play or board, but its really unimportant to the decision.

Old guy in seat 4 gets his small stack all in for a main pot of about $120. 2 other players, in seat 1 and seat 8, are all in for a side pot of about $60.

Final card is dealt, Seat 4 turn up his hand showing a full house. Seat 1 immediately throws away his hand, closely followed by Seat 8.

The table starts screaming "side pot, side pot" and both players ask for their hands back. Seat 8's cards are about 18 inches in front of him and he reaches for them. Seat 1's cards are laying against the muck and are easily retrievable, and in fact dealer quickly pulls them away from the muck and sets them aside as the table starts arguing over who gets the sidepot, and the floor is called.

Floor hears the story and says Seat 8's cards are live, but Seat 1's cards, since they touched the muck, are dead. Sidepot goes to Seat 8.

Question 1: Did the floor make the right call?

No one like the call, and Seat 8 and Seat 1 quickly agree to chop the sidepot. Floor says if that's OK with you its OK with me, and the dealer mucks both hands then splits the chips 50-50 and ships half to each player.

Question 2: If you're the floor, and the players agree to a deal that overrides your decision, do you let them?

Curious to hear your thoughts.