I'm glad this discussion has come up.
I think the answer is clear. Any ball going into Dead Ball Territory is dead and awards should be made accordingly.
The fielder holding up her hand is mearly and indication to us that she believes the ball has gone into dead ball territory.

The confusion comes when the mechanic is brought up and then explained in a confusion manner (such as, but not limited to) "keep your runners running - we can bring them back, but we can't move them forward", "if she doesn't raise her hands, it's Run Rabbit Run".

I had a weekend where, believe it or not, I had two coaches (in two seperate games) argue that despite the fact that I as BU had seen that the ball clearly passed the fence and was standing there with my hands up hollaring, "DEAD BALL, DEAD BALL, DEAD BALL", because the outfielder did not raise her hands, the runners should get the bases they attained (which was more than 2 from the time of the pitch).
One coach bought my explaination, the other argued almost to the point of being tossed.... I finally asked her, did the ball go out of play? Her response was, "But the fielder never raised her hands". :rolleyes:
She claimed that at the plate meeting she was told that "the fielder must raise her hands"
I don't doubt that she had been told that more than once or twice, but not at the plate meeting that I had attended.:)
I blame some of this confusion on my fellow umpires for not clearly explaining that the purpose of raising hands is simply a "heads-up" to the umpire.

I don't have a problem with the fielder's raising their hands. I didn't say that I did. What I said was that I personally don't go into a mini-rules clinic at the pre-game conference and that I leave the instructions to players on how to handle these situations up to their coaches.

Like Hugo posted above, I've had too many people interpret these pre-game discussions to mean that anytime a fielder raises her hands the ball is automatically dead, and if they don't raise their hands it isn't. And everytime it gets twisted around to, "The umpires told us that".

So, I let the coaches tell their fielders how to react if a ball goes out of play and let them tell their runners how to run the bases if it might be in question.

Kind of hard to be misquoted about something if you don't bring it up...

None of this changes our jobs as umpires or affects our call. If we see a ball go out of play, we'll rule accordingly, whether a player throws her hands in the air or not.

Yes, that could be a problem when the plate umpire isn't clear.

I personally have never had a problem with coaches when I explain to them something like:

"Okay, as you can see, the temporary fence stops at the foul lines. So if the ball goes past the end of the fence, it's a dead ball and we will rule accordingly. One of us will kill play when we see the ball go past the fence. But if we can't see it, I suggest you tell your outfielders to raise their arms and not chase it. My partner will go out and verify the ball did go past once play ends, and again we'll rule accordingly. If your outfielders do chase the ball when we can't see that it went past the fence, we can't rule that it went out of play. Any questions?"