Thank you for this answer from Decision 20-2c/4. That explains this situation well, and yes, the porta-john and fence were all part of a TIO restroom area set up for spectators.
In this instance, I would say that the rules official judged (prematurely in my opinion) that the ball was moving closer to the hole and would not return, so he picked it up for Kevin to place it. It was clearly not more than 2 club lengths. It was about 24-30 inches to the right of where it was dropped (facing the hole), and about 3-4 inches closer to the hole as it was slowly jiggling along the cart path toward the hole, but occasionally bouncing to the right. If allowed to continue, it likely would have continued closer to the hole and not returned, but on concrete cart paths I've seen balls change directions quite drastically.
I think what surprised me the most was seeing the official stop the ball (at the displeasure of the player), instead of allowing the player or caddie to make that decision. IF the ball DID jiggle/bounce back those few inches and come to rest on the cart path within 2 club lengths of the drop and no nearer the hole, I think Chappell would have gotten another drop for relief from the cart path, correct? (Or does complete relief from the TIO mean complete relief from all other relief situations?) If the NPR at that point was on the right side of the cart path, it would have been a huge break for Kevin who then would have had a chance to take a drop with a clear shot to the green (no tree obstructions from that point.)
I will add this... the rules official was very gentlemanly throughout the whole ordeal. He was very patient with Kevin who was frustrated with his own play and the situation and who at one point very strongly stated to the official, "No, you are wrong here!" But while Kevin was frustrated with the whole thing, he also maintained a sense of humor. As he left, he said to the spectators, "Nice to meet you all again," as he had been hooking it frequently on Sunday.