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Reserves
I think the key is "releases the ball for serve".
If the drop appears a legitimate release for serve, a reserve should be allowed. That could involve a toss but with an underhanded server, that could just involve a drop from the extended arm position.
I'd be inclined to give the server the benefit of the doubt in this sort of situation and award the reserve unless the ball was clearly not released for serve. The server obtains no real or unfair advantage by getting the reserve. The five second rule is really just to keep the game moving along.
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