I don't know about this story, but dynamite fishing happens alot, I used to guide in Malaysia and I would say I used to hear it at least once a week.
Just once, we felt the end of the pressure wave (or it was a freaky underwater sideways "push"), and that scared the hell out of me based on how much closer it was than I had assumed.
However, not sure exactly what type of large fish would send that amount of bubbles to the surface, but dive flags are really won't help (in my opinion) because they are using an illegal practice, out of small boats, so highly unlikely that they would have been taught what that flag meant.
Even if they have, I doubt they would have worked out just how far they can safely be from the flag not to cause injury/death from the effects of the pressure wave as some the the explosives they use are home made.