he arrested the fugitive in Mexico on a US warrant. i recall that by law, you cannot take the person back across international boundries. this is true in Canada at least... we had some US bounty hunters here denied taking someone back to the US in the 90's.. they called it kidnapping and were charged.
according to the article, and if true, Dog did in fact hand over Mr. Luster to Mexican authorites and handled it correct.
now, Rod has a interesting point. The US wanted Francisco Rafael Arellano Felix in a bad way. (now am i being paranoid? is their too much coincidence?) ???
edited: for paranoia/conspiracy theory