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Indeed lolA person's form should not affect your decision.
. I will be honest and say that when I have been confronted with this very incident I have blown for a free kick and stated that it's for playing in a dangerous manner and if the other player hadn't stopped he wouldn't be on the pitch now. Had it twice and both times I've had no real arguments, but the other player has always been close by rather than a metre or two away.
In which case that's an indirect free kick and you can't give a red card because it's not one of the seven direct free kick offences committed with excessive force (thus not 'serious foul play').It came under playing in a dangerous manner.
After the game I was chatting to several blue players and they said we thought you had a good game but you should have sent that boy off. Explained why I had gone just caution and they accepted it.