We looked up two things, an FIA track map with the marshaling positions indicated and a clearer copy of the onboard which you can see frame by frame from turn 3 on. I rocked the few frames where the marshal on the left side of the track is visible waving what, though not clear, we have to assume is a green flag. Vettel makes the pass after that green flag station so it's all legal.

Where did the confusion arise? Well, the light on Vettel's dashboard are still on at that point and stay on until he passes the next light station. The dashboard lights are perhaps tied to transponders at those light station as opposed to marshal positions (they don't always match) but flags still take precedence.

Below, laps 3 and part of 4, where Vettel passes the Marussia (notice the lack of top speed on the RB8 at this point) and then the Toro Rosso, Notice also that on lap 3 the flag station on the right at the exit of T3 is green while on lap 4 it becomes yellow and keep in mind the camera does not see as well as the human eye would in those conditions.

Final verdict? It was in fact heads up racing by Vettel, like a Champion would drive.