In most cases drop from water can be on the same line as far back as you wish. I personally think the rule states that since his ball crossed the water and rolled back in the drop should have been on the green side. Local rule makes him drop on the other side. If there was a drop area and he dropped out of it and signed an incorrect card he should be DQd. If no designated area...not sure why there is even a penalty.
There was a designated area, but I believe the announcers mentioned that it was a "red" hazard, which meant he had 3 options:
1. play from the drop zone - Tiger went to the drop zone to see the angle and condition, but determined it was muddy and angle not favorable
2. play from original shot's spot
...didn't hear what the other option was, but it may have been what Tiger did and play the ball in the same line as the original shot, but drop it further back