Batter Interference
 

What is the rule on a batter interfering with a play at the plate on a wild pitch?
The batter (10U) moved well out of the box but was looking towards the infield when the catcher --who retrieved the ball from the backstop--ran into him when trying to tag the runner who was coming home.
Had the batter not been there they would have had a very possible tag out.
I called interference and, since it was 2 outs, I called the batter out.
Correct?

Naturally, the rules don't directly address this particular case, but we can infer from the following rule that you made the correct call:

OBR 6.06c
The batter is out when he interferes.... by making any other movement that hinders the catcher's play at home base.

If there had been less than two outs, the runner would have had to return to third, which was the last base legally touched before the interference. In this case, make sure to announce that the run does not score.

If the batter had continued to try to avoid contact, he would have been okay, but he is obligated to pay attention and stay out of the way once he finishes his offering at a pitch.

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Actually I did have classic batter's interference at the plate earlier in the same game and because it was only one out I called the runner out, which is the correct call in OBR.
(The batter had just walked on a wild pitch but lingered at the plate when R3 came running home.)
In my OP the coach had asked me how far the batter has to back up to avoid an interference call?
I told him he must do more than just back up--he must avoid the catcher when he is attempting to tag the runner ( or while throwing the ball to F1 if covering the plate)
I was wondering how others feel about my interpretation..

I agree with your interpretation as you stated it to the coach.

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If the batter has time to get out of the way, he must do so. Moving into a spot that is still (or becomes) in the way is INT.

I'm not sure the rules reference above is the correct one -- it applies during an "immediate" play by the catcher -- (usually) either on a squeeze / steal of home, or a pick-off attempt. It exempts the batter from INT if he stays still (other than completing his normal swing). Once the ball gets away, though, a different rule applies. I don't have time to go cite it for you.

Thanks.
No reference needed.

MT, with two outs the runner is out, and the batter would re-start his at bat in the next inning. But it sounds like an easy interference call to me.

No-- with 2 outs the batter is out.