The most important lesson in this incident is that the player did not play a wrong ball.  When the player dropped a ball (Ball A) it was a substituted ball. 

Although the player declared Ball B unplayable, she abandoned her intent to proceed with Ball B when she lifted and dropped Ball A intending to proceed under Rule 28 with Ball A.  Rule 28 was not an applicable Rule for a ball not in play and, as the Committee, we must determine the Rule to apply.

Ball B was the player’s ball in play. When she dropped and played Ball A, she substituted a ball for her ball in play and therefore was in breach of Rule 15-2.  She also played from a wrong place and the applicable Rule is Rule 13-1. The player incurs a penalty of two strokes for playing from a wrong place (Rule 20-7c) – no serious breach.  There is no additional penalty for incorrectly substituting a ball.  See second paragraph in Decision 18-2a/8.5. [In 2007, the player would have incurred four penalty strokes.]

[Many of us ruled that the player incurred three penalty strokes, a one-stroke penalty under Rule 28 and an additional two-stroke penalty for playing from a wrong place - a reasonable logic but not the correct ruling as determined by the USGA.  When the player concluded that she was to proceed with Ball A, she was no longer proceeding with Ball B. The player did “abandon” Ball B and it is reasonable to conclude that her intent to proceed under Rule 28 with Ball B was no longer applicable.]