Incomplete Pass or Fumble?

[whitehat]

2-31-2 note, seems to imply that it is an incomplete forward pass as JR writes. My first instinct was fumble as Mb writes. There is an interpretation in the Redding book page 37-38 that rules "incomplete": "Once the passer starts his arm forward, it is a forward pass regardless of which direction the ball leaves his hand or where the ball lands" (page 37 bottom right). Page 38 top left is a case play saying the same thing.
Just from experience it would be a lot easier to sell it as a fumble rather than a an incomplete pass but want to know and understand the exact letter of the rule...