I didn't look at it from engaging the rubber with hands together for it to be a balk. I would approach it in that he disengaged the rubber with his pivot foot and didnt drop his hands to his side as required. Waiting for him to engage the rubber just gave him the benifit of the doubt and gave him time to drop his hands in this senerio. (moving quickly back to the rubber)
As I remember the rule it does not give a time frame for dropping his hands to his side after disengaging the rubber. So that is a judgement call.
I am not sure if its the OBR or Fed but I believe it's mentioned that once engaged he must come set. But here he already is. The description to come set states " Preparatory to coming to a set position, the pitcher shall have one hand on his side; from this position he shall go to his set position as defined in Rule 8.01(b) without interruption and in one continuous motion." And when he disengages the rubber he must drop his hands to his sides unless he is attempting to retire a runner at a base.
When 8.01(a)3 says disengage the rubber (if he does he must drop his hand to his sides).
In disengaging the rubber the pitcher must step off with his pivot foot and not his free foot first.
He may not go into a set or stretch position—if he does it is a balk.
Because he is in a set position with his foot off does that not make it a balk at that point? Giving him time to drop his hands of course.
The Fed rules may have a different take on it so I would like someone with access to the FED rules to help out here.