As we say in the military..."That's a technique". If it works for you, then, use it. The issue I see with the example you gave is that you are leading on and encouraging the interaction to continue by your replies; you are inviting the coach to continue( you didn't mention if he was yelling or asking calmly). In either case, let him get it all out before responding, no need for your first 2 comments. Once he got to "the rule says" and or stops talking, then you can respond.
The best method I have found, even outside of baseball, is to follow and do this: Listen, Pause, Think, and Respond. Listen to what he is saying, meaning active listening, not just waiting to respond with your answer, even if it is obvious to you. Pause, this is a brief pause for you to formulate your reply and to also make it more of a normal exchange and not a back and forth shouting match, even if he is yelling. Think, given the circumstances (yelling, calm, how the game has progressed good/bad at that point) of how you will compose your reply to the situation that also addresses his issue that you identified back at the Listen part of this. Once you have your reply, calmly state it and explain if it requires it.
So I use the acronym LPTR to remind myself when I see arms flailing and speed walking coaches coming from the dugout. In your scenario/situation, I would have let him have his say and when he stated "the rule says" and stopped talking, I would explain to him how "that rule" works. Something like:
"Tom/Coach, that rule is for a runner in fair territory being hit by a fair ball. The ball was hit foul and the player was in foul territory, so it is foul ball, ball is dead and runners return to their bases at TOP."
Context is important in this, as mentioned, has it been a heated game, is the coach calm/yelling, been confrontational all game, etc? Your reply may be shorter and more direct to shut down any further discussion if warranted.
If after doing this, he is still going on, then escalate in the usual manner with a definitive ending statement like “The call stands. We’re done. Let’s play.” or “That’s enough. Return to the dugout.”