In FED, using the opposing teams on-deck circle is definitely illegal.

No reference in OBR. At the tournament fields I go to, this discussion comes up at least once a year. We allow it, and have had no problems.

The college game you are refering to was @ Wichita St., but did not involve the on-deck batter. While a pitcher was warming up, the batter was right next to the plate, and the pitching coach told his pitcher to bean the would-be batter.