Penalty question

Ok, i'm a little confused (I know..happens a lot).

Winnipeg punts and the Hamilton returner gets to about the 25.

There are two penalties on the play. Winnipeg is call for procedure (no end). Hamilton is called for hold or illegal block, not sure which one.

We decline the Winnipeg penalty and start at our own 7. Should this not be a re-kick?

The only thing I was thinking is that the difference in yardage may have given Winnipeg a first down...not sure?

Can anybody confirm what really happened there, from the stands I couldn't tell why we would do that.

Made no sense to us and the radio didn't make it clear.

Winnipeg had a 5 yard penalty and were kicking with the wind, the penalty occurred before the kick meaning Hamilton has the choice to re-kick or decline. It was a bad kick with a decent return... so im assuming we wanted the ball... however taking it on the 7 isnt exactly a great place to start... so maybe Taaffe wanted to set the offence up deep considering it was preseason.

It was 3rd and just a little more than 5 yards.
The procedure penalty would have put Winnipeg 5 yards back, but they still would have applied the illegal block penalty (10 yards) which actually made it a net gain of 5 yards for Winnipeg. That would have made it 3rd and about a foot. Winnipeg likely would have made a first down from there so Taaffe declined the penalty to take the ball, with the illegal block yardage being applied from the downfield spot.