The major issue is that they ignored their own protocol for the first penalty. You can't do that sort of thing and expect to be taken seriously. Unfortunately the media have too much at stake to show them up for what they are. The right answer was 'The equipment's not working, your call stands.' Schalke of course would bleat about it but they bleated about everything anyway.
On the subject of the laws, why not have two levels of penalty? For the usual type of handball and maybe holding at corners and free kicks, a penalty kick from 18 yards, and for fouls and deliberate, moving the arm, handball a 10 yard, not 12 yard, penalty kick. A lot of handballs in the area are committed when there's absolutely no likelihood of a goal resulting if contact with the arm isn't made. Same for holding: nobody even knows who's going to get the ball. Eddie got that one the other night. They wouldn't have scored if Fern hadn't have touched the player. They wouldn't have even had an attempt at goal. So make the punishment for the infringement much harder to score from. Schalke got two goals they didn't deserve from a hopeful snapshot that was going at the goalie and a free kick lobbed into the box. So for dubious borderline infringements like last night, a goal should be a less likely outcome and everyone might be a bit calmer about the whole thing. Less to gain by cheating and appealing. Less to get upset about for the defending team.