There is no other explanation in the rule book or elsewhere that I can find and I have always played it as a normal retreat, except that the flag can not be ignored and generates a one-hex retreat.
I really dont see any unclear ruling in the rulebook.
1) Page 18, left column, top "If the cavalry unit cannot retreat, one block is lost for each retreat hex the cavalry unit cannot complete"
So it states clear, that a cavalry must retreat but loose 1block, if it cannot full retreat. And if only 1hex is available to retreat (in your example the still adjacent hex of the target infantry), it retreats those one hex and loose blocks for the uncomplete hexes.
2) The the question is, can the cavalry now attack the infantry, because it is still adjacent, we read a few sentences later.
Same side, same column. "If the cavalry unit is not eliminated or forced to retreat from its hex when being attacked by the infantry in square, the cavalry
unit may melee against the infantry square with a maximum of 1 battle die."
So the answer here is also clear. The cavalry was forced from the original hex, although it was only 1hex, but this is enough, to prevent a battle against the Infantry in square now.
So i dont see any unclarity and all are written/explained in the rules.
Or do i missing now something else ?