The "No Action Needed" button primarily exists to stop robo-reviewers from upvoting the answer instead. Thankfully, that didn't happen, and there are users (like you) who watch the review queue for bad "No Action Needed" reviews.
Should this be something that should be flagged?
I wouldn't flag based off a one-off instance like this. At first glance, the answer appears like an answer. While it is expected of reviewers to carefully look at the posts, users do make mistakes sometimes (though I would have spotted that it's not an answer after just three seconds). In this case, I'd check the user's reviews to check for a pattern of robo-reviewing, and only if such a pattern exists report it.
If I do report this moderators: What are the repercussions from this? Would this be review-ban worthy, on the first mistake? Is this something that would you want to see and track from the first mistake, or something that should be reported/tracked after n or more mistakes? If so, what is n?
If I were a moderator looking into such a flag, and looking at the user's reviews, I wouldn't ban them just for a single mistake (misclicks can happen, it's possible that the user noticed and flagged the answer later). I'd only want to track them if they show a pattern of incorrect reviews. I'd ban them if they met criteria similar to automated bans for failing audits (3-5 or more incorrect reviews at a time, with increased scrutiny shortly after coming off the ban). If they were under that pattern, but still show a propensity for incorrect reviews, I'd warn them and encourage them to pay more attention when reviewing.