I always assumed that NRR was always calculated over the full 20 overs unless you were the team batting second and knocked the runs off.In theory, they could win and go out. If Australia have a negative run rate from this match of 1.1 or more, they'll be out whether they win or lose.
For example, the Aussies bat first and score 200 off their 20 overs, England are all out for 170 but only bat for 15 overs. Australia would have a run rate of -1.33 from the match and be out of the competition.
But thinking about it However, that wouldn't be fair either, so your explanation sounds sensible.