How do you interpret this rule? According to how I read it, it is only illegal touching if an ineligible bats or muffs the ball. According to the definition of a muff, a muff is an attempt to secure possession. Thus, if a QB loses the handle of a pass and throws it into a lineman's back, I don't think this is a penalty because the lineman isn't trying to secure possession of the ball. Do you agree with this line of thinking?

Looks to me like all you have here is an incomplete forward pass.

Canadian Ruling
 

We've got an interesting one in Canada:

If the QB's FP hits an O-lineman in the back, it is an incomplete pass, but we do not blow it dead. If it is caught by a defender, it is a interception. So, we have to hold on the whistle and see what happens next.

There was an interesting play once where this happened and when an eligible A player caught the ball, it should have been blown dead as an incomplete pass. Instead, the play was allowed to continue and A crossed the B goal line in possession of the ball. The R stayed with the QB because he was hit very hard (legally). When his crew told him what happened, he asked why nobody blew it dead. The story goes that nobody else knew that odd rule.

The bad part is that during A's run to the goal line, time ran out with A losing by 2. Had the play been properly blown dead, there would have been time for one more play, and with a good field goal kicker, they had a chance to win.

The R had to wave the play as an incomplete pass, and tell coach A that the game was over.

Yup, as long as it is behind the neutral zone. Once it hits the ground, it is incomplete.

Be careful on this one. If the QB intentionally throws it into an ineligible you may have an illegal pass.