First, a spy would not wear an American flag jacket. He might support 茉莉花, but not a SPY.
Second, the people doesn't have to be police to identify the Ambassador.
In fact, an ordinary police wouldn't know an Ambassador more than a person who have seen him before.
Well, the official explanation from the US embassy was just 此地无银三百两, i.e. A guilty person gives himself away by consciously protesting his innocence.
Everything about the so-called protest/demonstration is so suspicious, and looked like faked. First of all, the call for the protest/demonstration came from a website called Boxun located in USA.
Secondly, one has to ask who informed all those international press/media/TV reporters about the protest/demonstration?
Put it this way, if he passed by there accidentally, he's just showing up at the wrong place at the wrong time; If he passed by there intentionally, from what we saw on the clip I can see no harm or any violation against the law... Why bother??