I've seen a youtube clip of Big John explaining strikes to illegal areas. If the guy getting hit moves an illegal area into the oncoming strike it's not a foul. It's only a foul if the attacker keeps hitting the illegal area.
So for this instance the referee saw that he was intentionally blocking a kick to the arm with his face and there was no foul.
I, too, would have liked to see the guy get KO'd for bringing that soccer-style drama into a fight.