[greymule]

If #2 gets a base hit, is it then #3's turn at bat?

No, #3 has used their turn at bat. The next scheduled batter would be #4

7-2-D-2-c

The next batter is the player whose name follows that of the player called out for failing to bat. Exception: If the incorrect batter is called out as a result of their time at bat, and is scheduled to be the proper batter, skip that player and the next person in the lineup will be the batter.

The way I read this, if #1 is supposed to bat and number #2 bats instead and makes an out, and the defense appeals the BOO, #1 is out, #2's out stands, and #3 would bat. The incorrect batter (#2) has been called out as a result of his time at bat and is scheduled to be the proper batter, since the lineup would continue after #1. In that case you skip #2 and go to #3.

But if, as in Situation 1, #1 is supposed to bat and #3 bats instead, then #1 is out, #3's out stands, and #2 would bat, followed by #3 again.