From my perspective as a priest, this is simply not a hill I’m willing to die on. In fact, I think the practice can actually be quite helpful. Let me give you an example.
We often (rightly so) lament the state of affairs that sees so many people come forward to receive Holy Communion who are not in a state of grace. I would say this is especially prevalent at funerals and weddings. Often times, non-Catholics who don’t know any better will come forward to receive at these events. I can’t speak for what other priests do, but if someone presents him/herself for Communion, I have never refused the sacrament. I simply have no way of knowing if the person is Catholic or not, in a state of grace or not, has kept the fast or not. That’s up to each individual person to determine for himself.
That said, when I have a funeral or wedding that A) has many non-Catholics present, B) has many people who clearly haven’t been to Mass in awhile as is evident by their responses (or more appropriately, lack thereof) or C) some combination of the two, just prior to the distribution of Holy Communion, I will make a brief announcement that at this time, all Catholics who are prepared to receive Holy Communion are invited to come forward. I also add that anyone not receiving Holy Communion that day, for whatever reason, is welcome to come forward for a blessing, and to please cross your arms as a sign to the priest.
Now, as a point of fact, what I do is not actually a blessing. I encourage my EMHCs to do the same. Instead, I will place my hand on the person’s head, and say, “Receive the Lord Jesus in your heart.” So, it’s not a blessing, per se, it’s an “invitation to a spiritual communion.”
The bottom line, from my perspective, is this. In the United States (where I presume most are reading this), people are going to come forward. Don Ruggero correct me if I"m wrong, but my guess is that this would be the case in much of western Europe as well. If I were talking to a predominantly Latin American group, it would be different, as it’s routine for half of the congregation to stay in the pews in Latin American culture. But again, I’m talking about contemporary US of A. And here, people are going to come forward. That means people are going to come forward at Communion time who probably should not be receiving the Eucharist on that one occasion.
Shame and reputation are important factors. It’s sad but true that most people would rather receive the Eucharist while not in a state of grace, than have to even think that everyone is staring at them, wondering why they didn’t go forward with everyone else.
It seems to me the option for a blessing/invitation to spiritual communion is a happy way to remedy this situation. People can still come forward without fear of shame or embarrassment (as most won’t be able to see if Father is giving Holy Communion or putting his hand on a person’s head), but not commit sacrilege.
To the OP, from where I’m sitting, you absolutely did the right thing.