A fly ball that hits the fence is no longer in flight and cannot be caught for an out. It is however, still "in flight" if it hits the fence and continues OVER the fence, and is therefore a home run.
On the call in the Cuba-Australia game, the umpire did not rule that it was an out even though it hit the fence, he ruled it never hit the fence.
He didn't blow the rule, he's just blind.
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