"You have to forget," Gracie said. "It’s a fight. I wish, when I was fighting, that I had hair to grab [laughs]. That moment is fighting for survival. You’re in a bad situation too."
After eating brutal punches in the second round, Romero was given extra time to recover between rounds while referee Big John McCarthy asked his corner and the cutman to remove vaseline from his cut.
Kennedy protested, but the fight went on. Romero ended up beating the former Strikeforce middleweight title contender by third-round TKO.
"If I was in that Cuban’s situation, I would do that too," Gracie said. "If my fighter was on that situation, I would do that too. I would give him time to recover. He was almost knocked out in the last 10 seconds. This is what boxers have used for ages.
"You see people overthrowing water on the athlete so they have to dry the floor. That’s to gain time," he continued. "You want to stop this? Remove the (stool). You can’t sit. And when the bell rings, you shoot right off. That’s the only way to stop this."
Despite the controversial TKO loss, Gracie still sees Kennedy as "the best," but should stop protesting the loss.
"He’s the best. Every time he fights, I wanna watch," he said. "I think Tim is a great guy in every sense. There’s nobody will balls and guts and will to train and fight as hard as he works. He’s amazing.
"But I honestly believe the one who wins, talks. The one who loses… Because it only looks ugly. I know he’s hurt, and I don’t mean nothing by saying this to him."
On UFC Tonight on Wednesday, MMA Fighting's Ariel Helwani reported the camp is split on whether Kennedy should appeal the result at UFC 178.