I don't like it at all.
First of all, it didn't look like 4th and inches to me, it looked like nearly a full yard. One overlooked part of that decision is that by taking the penalty, you are conceding points. Either 7 if they make it, or 3 since you're assuming they'll just take the FG if they don't get this 3rd down. If you decline the penalty, you have a chance to give up 0 points if you make a stop on the next down.
You've already stopped them on 3rd, and you're going to force your defense to do it twice. How do you know they won't just go for it on 4th anyway even if you stop them if you don't think they'll take the FG this time? Then that just gives them an extra play. You're also telling them that you have zero confidence in them being able to make a stop on 4th and short against the 49ers line. I generally agree with MM's decisions, but I don't like this one at all.
A holding call that made it 3rd and 11, I would be a lot more sympathetic.