While I agree that this would be correct by the letter of the law, I dont think it is fair to penalize the intercepting team for getting pushed out of the endzone after making a good play.

Isn't pushing the runner out of the end zone considered to be a good play?

If a runner was being pushed forward and made a first down because of it, you'd obviously give him the ball at the forward spot. There's no difference on this play. Where did the ball become dead? The 1. That's where it goes. Read all of your rules about touchbacks - none of them apply to this situation. This one's very black and white. Simple non-TB.