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You are correct. Rule is 3-3. The only restriction this rule places on subs is the requirement for a player who has been withdrawn to wait until the clock has properly started before he can reenter. In your scenario since the player failed to report to the table prior to the warning horn for the timeout, he is able to sub at the next available opportunity which is the next dead ball. In the OP this dead ball occurs after the first free throw.
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