I appreciate the citation. I will study it. I am concerned that something may have gotten lost in the ellipses. Otherwise I am afraid I cannot agree with your reading of the rule. The delayed dead ball provision is explicitly made inapplicable if the "PENALTY" clause applies, so you can't get back to the delayed dead ball provision via that PENALTY clause. The PENALTY clause says if there were two outs when the play began, the batter is out, and since this was an explicit exception to the delayed dead ball provision in the first place, there never was a delayed dead ball. Batter is out and inning ends. The PENALTY clause has other provisions for when there were fewer than 2 outs, but those don't apply here.