I think so too. Grabbing someone by the breast would probably have gotten him booted immediately and maybe led to criminal charges -- Survivor misplayed this event, IMHO, but they have evolved from the days of Richard Hatch rubbing his naked crank against Sue Hawk.
But not grabbing a breast doesn't make stroking someone's hair or playing with their toes or any other parts okay.
Dan's apparent befuddlement at the accusations concerns me. Ignoring the interstitial card from CBS claiming they talked to him about it (which is weird, since he had this gosh-wow surprise reaction after the first TC, but whatever). I *think* I remember him or one of his defenders saying "that's just how he was raised, it's a generational thing" in Episode 1. When you combine his declared "hugginess" with his confusion about anyone being offended, I'm worried about how he treats his employees. Kellee was reluctant to speak up because it might torpedo a game that ends with an enormous amount of money -- but employees being afraid to speak out against their bosses is a real, daily problem.