But Adam, that's assumed. The question is moving a ball from in the water, within one club-length, to a playable spot on dry land within the hazard. By technical rules of "drop within one club length, don't improve condition", this would be allowable, since they are not moving it out of the hazard.
It's just so damn WRONG though, since it takes it from unplayable to playable, that we have to think of something to disallow this.
One way would be to change the one club-length criterion to something smaller. But even then, a situation like this might be possible... Even a scorecard-length could get one out of the water and onto some mud or something....
My take would be this: add a special rule for scrambles that all balls in hazards must be played as they lie if they are to be played, no movement allowed. That is, you hit the first ball, then place the remainder exactly where the last one was. You know, kinda like what one does when trying to identify a ball, or after marking it when it's not on the green, in real golf?
But of course Mike B. is right. So few golfers follow the rules anyway in regular golf, it does seem folly to try to legislate scrambles, where goofiness prevails. Still, for a member-guest or something where scramble might be one of several formats played over several days (as it often is), it would be nice to get some codified rules. And I'd start with this one.
TH