Balk from a Set or Stretch position

[Rbn3]

...he must drop his hands to his sides" is the exact sentence from ORB. It says "when" he disengages, not "before he re-engages."

I find you are correct in practice, since I have never seen a balk called on the "step back throw to first move" when the pitcher keeps his hands up and raises his throwing arm immediately without dropping it. Yet the rule seems very clearly to indicate failure to do not is not legal.