I'm glad this discussion has come up.
I think the answer is clear. Any ball going into Dead Ball Territory is dead and awards should be made accordingly.
The fielder holding up her hand is mearly and indication to us that she believes the ball has gone into dead ball territory.
The confusion comes when the mechanic is brought up and then explained in a confusion manner (such as, but not limited to) "keep your runners running - we can bring them back, but we can't move them forward", "if she doesn't raise her hands, it's Run Rabbit Run".
I had a weekend where, believe it or not, I had two coaches (in two seperate games) argue that despite the fact that I as BU had seen that the ball clearly passed the fence and was standing there with my hands up hollaring, "DEAD BALL, DEAD BALL, DEAD BALL", because the outfielder did not raise her hands, the runners should get the bases they attained (which was more than 2 from the time of the pitch).
One coach bought my explaination, the other argued almost to the point of being tossed.... I finally asked her, did the ball go out of play? Her response was, "But the fielder never raised her hands".
She claimed that at the plate meeting she was told that "the fielder must raise her hands"
I don't doubt that she had been told that more than once or twice, but not at the plate meeting that I had attended.
I blame some of this confusion on my fellow umpires for not clearly explaining that the purpose of raising hands is simply a "heads-up" to the umpire.