I think the IAABO exam has the wrong answer. You've cited the correct rule, 10-1-6, and if the officials (not including the scorekeeper, as this is not a scorekeeper responsibility) do not discover it while the infraction is occurring, then it's too late.
10.2.2 does not extend to this case because in 10.2.2 the substitute is still on the court and the officials observe him or her. This infraction can be penalized under "penalize when observed" because it's capable of being observed.
What's different in 10.1.6 is that there's nothing for the officials to see -- the player has returned to the bench -- and we don't take testimony about fouls or violations.
