First of all, there is more to this story than the reporters are reporting.
No, he wasn’t wrong, but he was wrong in the way he did it. He should have told her beforehand, not publicly. By talking to her beforehand, she would have a chance to defend herself also.
However, if they’re going to deny communion to one person for not being in communion with the Church, then they need to not only do it for her, but for everyone: all the adulterers, gay people, remarried people, cohabitating people, etc. It looked like he singled her out which isn’t right either. Of course they can’t presume to know who is in a state of grace and who is not. But if a priest is going to deny Communion to someone, he better find out beforehand.
His Bishop was wrong not to support him. But, if he was going to claim that the priest was wrong, he should have also reinforced that she was wrong too, and reiterate the teachings of the Church regarding the requirments of presenting onesself for Communion.
The priest was wrong to leave before the eulogy and not complete the task at the cemetery. Not sure what was up with that. Not sure if he was given additional trouble by the people there and just left, or was subjected to abuse by her friends, or whatever the case was.
Also, keep in mind: if she went to confession to him before and he found her to be unfit to present herself, he couldn’t defend himself with that information. She’s not a politician, she was just a lay person. We don’t know what happened between the two of them, and in what capacity and under what circumstances.