The stop sign was for the sidewalk. Any lawyer would say that and be correct.How was the cyclist "right?" He ran a stop sign and rode out in front of oncoming traffic. Without being able to see the signage facing the cars I would say the driver was wrong for leaving the scene but the collision was the cyclist's fault.
That being said, you can’t just ride through like that, unless you are in Princeton, where the second anyone enters the crosswalk, people slam on the brakes.