No, the ball hit the ground. Te'o came down with the ball. His hand was UNDER the ball, and his hand made contact with the turf. He MAY have attained possession at this point. A split second later, his momentum caused the ball to rotate, and the ball then touched the ground. At that point, the ball was dead and the fact that Te'o then bobbled the ball was irrelevant.
The correct call turns solely on whether Te'o attained possession before the ball touched the turf. I think the correct call probably was made, but if it was possession, it was for such a brief micro-second that it could easily have gone either way.
My guess as to what actually happened on the field: The ball touched the ground for such a tiny moment in real-time that the on-field officials just didn't see it, and thus the call would have been "interception." Based on that, there was definitely insufficient evidence to overturn.