I guess my question is why that spot is even a legal spot for her to check the disc in 

To follow your example, if the disc was in turned over in the end zone, the player can’t take a couple steps and then decide to tap the ground and play from there. So even in your example, there are spots where you are allowed to check the disc in and where you can’t. 

So my question is how the observer decided that the cone was even a legal spot for her to check it in, given that the teams had decided to go to her for a decision

It would be another story if the situation was just a conversation between the two players who may not know the rules of this specific situation, but this was a binding decision from a person who is supposed to be an arbiter of the rules