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The problem is the exact same one we've had all along with any kick that is recovered by K: 2-16-2h(5) is worded incorrectly.
It says: "And K does not have possession of the ball when the down ends and will not be next to put the ball in play." (emphasis mine)
The problem is that little word "and" in the middle. Logically, it means that both parts of the clause must be true; when (for example) K downs a punt or it goes out of bounds, the first part ("K does not have possession of the ball") is false. So, as the rule is worded, PSK should not apply when K downs a punt.
But this is not what the NFHS meant. What they meant is that you should ignore the first part of the clause entirely, and treat it as if it simply said "K will not be next to put the ball in play." The case book rulings all treat the rule as if it reads this way, so that (continuing the example) PSK does apply when K downs a punt.
Applying that principle to your original play, since it was 4th down and K has not reached the line-to-gain, K will not be next to put the ball in play. Since all of the other conditions are true, PSK applies and the corrected ruling is "correct" (even if it doesn't actually follow the rule as written).
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