Good pick-up and correct.
The film is classified “M” in its uncut state and Seven aired it 7pm, hence needed to be modified under the code.
People on fire is never allowed at the “PG” level.
(e.g.)
3 weeks ago - “Indiana Jones and the Temple of Doom” (1984), removed the man who’s heart was taken out, catching fire as he’s lowered into the fire pit + countless other movies from all networks over the years.
IMO, I also think a person catching fire (especially if they’re screaming/thrashing/prolonged) is violence that is “moderate” in viewing impact and hence firmly puts it at the M-level.
Annoying, yes. Justified, more than likely 
It was the only Star Wars to be given an M classification