I agree that he held a Substitution atonement. This is not Penal Substitution Theory (see my quote from Augustine).Augustine
“This, the catholic faith has known of the one and only mediator between God and man, the man Christ Jesus, who condescended to undergo death—that is, the penalty of sin—without sin, for us. As He alone became the Son of man, in order that we might become through Him sons of God, so He alone, on our behalf, undertook punishment without ill deservings, that we through Him might obtain grace without good deservings. Because as to us nothing good was due so to Him nothing bad was due. Therefore, commending His love to them to whom He was about to give undeserved life, He was willing to suffer for them an undeserved death.” (Against Two Letters of the Pelagians, Book 4, chap. 7)
We cannot pull apart parts we like from Augustine (or anyone). That is not being honest.
The difference, of course, is Augustine taught Jeses did not die to appease God. I agree with Augustine's statement in your post. But I do not hold Penal Substitution Theory.