tballump,
Wow! The T-Ball in your neighborhood is a lot more "old school" than in mine.
Steve,
I agree that it is interference and the batter out if the umpire judges that he intentionally "released" the bat in a way intended to hit the ball.
However, if he just "normally" releases the bat, without any intent, and the bat happens to hit the ball (...which the defense has just "misplayed", resulting in the batter becoming a runner...) in a way that "complicates" the play of the defense, he is NOT guilty of interference, and it's "live ball, play the bounce". "That's Nothing!" would be the appropriate verbal.
The rule you cite applies when the bat complicates the play of the defense on a
batted ball, not a "misplayed" ball that the defense is chasing. (And, apparently, as of 2009, on a "thrown" ball as well.)
JM