No, it was an example of a likely false positive with the rules above
Granted, you can eliminate false positives with your two pass method, but there could be literally hundreds of them, often many more than real "internal dialogue" phrases.
As for false negatives, I often find dialogues (internal or not) that just omit the "he said", "she thought", etc. words. One should also look for "he said to himself" or "he wondered", or "he secretly admited", etc.
An automated tool can be of some help, but the danger is letting the user rely solely on the tool, which can be worse than just leaving the "internal dialogues" unformatted. Similarly, when I see curly quotes wrongly oriented I would prefer they had been left as straight quotes instead.