Let's set aside the score and look at the general case. It's a special situation because there is no subsequent kickoff. Instead of being worth 2.7 Expected Points (EP), a FG is worth a full 3 EP. And a TD would be worth a full 7 EP instead of 6.7. The offense would take the full value of the score.
The expected value of each choice is straightforward. It's just the probability of success * the value of the score. In the case of the FG it would be:
0.99 * 3 = 2.97 EP
And in the case of the 'go for the TD' option, the expected value would be:
P(success) * 7 = ?
The break-even TD-success rate would need to be 42% to justify going for the 7 points. The league-average success rate on the 1-yd line is about 65%, meaning all other things being equal, the TD attempt would have been the slam dunk choice.
Based on league-wide averages, it would make sense to go for the TD all the way out to the 4 yd line.