Does the prayer become void if the Imam returns from standing for the third unit (rak'ah) – which is a pillar – to the first Tashahhud – which is a Sunnah – after he has fully stood up? And did the worshippers err when they said "Subhan Allah" to the Imam in this situation?

If the Imam stands up from the first Tashahhud forgetfully and fully straightens up, then, according to the majority of scholars, it is not permissible for him to return. If he returns knowingly and intentionally, his prayer is invalidated. However, if he returns forgetfully or out of ignorance, his prayer is not invalidated. As for the congregants, they must follow him, and it is permissible for them to alert him by saying "Subhanallah" so that he may perform the prostration of forgetfulness. If the Imam returns out of ignorance of the ruling, his prayer is valid, and so is the prayer of the congregants.