Things a referee would look at:
1. Where are the eyes of the player committing the foul? If they are on the ball, then perhaps the player really thought he was going to get the ball. The foul could still be reckless and could still warrant a caution, but at least there was no intent to hurt, or at least the player was "playing the ball and not the man." You sometimes see this when a ref calls a foul on a contested header, where one player is looking at the ball and the other is clearly looking at his opponent and making contact. In this case, the player in blue is clearly not looking at the ball--in fact, his back is to the ball.
2. Did the player try to avoid contact once he realized he wasn't going to get the ball? Sometimes a player mistimes a challenge, but as he realizes his error, he tries, perhaps unsuccessfully, to avoid the contact. In such a case, if it is a bad challenge, the player could still get a caution, but it is unlikely that the player will be sent off because at least he tried to avoid the other player, indicating a lack of intent to hurt. In this case, the player in blue not only makes no attempt to avoid contact, but he also jumps into the contact, indicating a clear intent to injure the other player.
3. What are his arms doing? Are they in a natural position for whatever action he is engaged in? This is, of course, the inevitable question with "Intentionally handling the ball." It is also the question when two players are going up for a header and one has his hands on the other's back. Is he pushing or just protecting himself? In this case, if the player in blue is attempting to avoid contact, why is his arm coming up through the white player's head?
As to the ref's position and angle, he is in the perfect position to see this play and to make the proper call, but he simply chooses not to.
Perhaps his thought process is, "Well, the player in white should hit the weight room and do all those exercises that build up the skull muscles."
