13-2. Improving Lie, Area of Intended Stance or Swing, or Line of Play
A player must not improve or allow to be improved:
the position or lie of his ball,
the area of his intended stance or swing,
After Tiger made his drop, he not only was improving the area of swing, he also was using his club to do it. One interpretation says his ball was in the water hazard, prohibiting the action. A more forgiving interpretation is that his already suffered the stroke and distance penalty and was improving the swing area of his new ball lie.
Which, actually, is not either of the rules they cited. This was ruled under section 26, and the card mitigated under 33.