The lineout should have occurred. Had the Bristol player, being in touch, knocked the ball before it crossed the plane of touch, play carries on and we argue over the knock on. That isn't what happened. Had the Bristol player jumped from the playing area into touch and knocked the ball on into the playing area, we argue over the knock on. That isn't what happened either. 18.2b states that if a player jumping from within or outside (as in our case) the playing area then catches the ball (not in our case) and lands in the playing area (possibly in our case) then ball isn't in touch. He did not catch the ball. Lineout to Leicester.
18b says "
A player jumps, from within or outside the playing area, and catches the ball, and then lands in the playing area, regardless of whether the ball reached the plane of touch." I think he landed on the line, so did not return to the FOP, therefore lineout (knock on is then irrelevant); but let's say he landed in the FOP... according to 18b he must (1) jump, (2) catch the ball and then (3) land in the playing area, but it does not say he must still be in possession of the ball when he lands... if he completes the 3 required actions then I don't see an issue that he also passed the ball between catching and landing. Also, since neither the ball nor ball carrier has touched the ground outside the playing area then the ball is not in touch at all (if he had landed within the FOP).
After looking at the video it seems obvious to me that it should have been a lineout because it certainly looks as if the ball had crossed the plane. But I haven’t seen a camera view along the plane admittedly. The first thing that happened was the ball crossed the plane. The second was the knock-on.
In touch is when "the ball or ball-carrier
touches the touchline, touch-in-goal line or anything beyond". Simply crossing the plane of touch whilst in the air is not "in touch".
Regarding the clock and whether advantage should have been played, I can't find anything in the laws that specifically states the correct action in the scenario, therefore I think common sense and what feels right (with benefit of doubt) should guide the decision... I don't expect Bristol complained that the scrum was awarded, but if it had not been allowed you can be certain there would be outcry from Leicester.
Bristol were deemed to have knocked on before the clock reached 80 min, therefore Leicester must be allowed to benefit from the Bristol infringement with either a tangible advantage in open play or a scrum. You don't want a scenario where the ref is blamed because he decided to play 5 seconds of advantage until the clock hit 80 min and therefore actively denied Leicester the opportunity of an attacking scrum and the opportunity to win the game.