My original post may not have been as clear as it could have been. It seemed like the ball was plugged in grass in the lip of the bunker. Maybe it's not correct for me to refer to a lip as having grass. In any case, the grass, as best I could tell, did not look "closely mown." So, I was wondering about the about the definition of "closely mown" and from there the definition of "fairway height."
Probably the answer, as many of you suggested, was a local rule in force allowing a drop anywhere through the green. I was not aware of that possibility, i.e., the local rule option as explained in Appendix I. Thanks.
I'm going to look into it further in connection with the following. The rule is on my mind because a couple of weeks ago I was playing with a guy whose ball was embedded in the rough (at a public U.S. course I play fairly regularly). I thought he could take free relief, while another member of our team pulled out the rule book and pointed out the "closely mown" language in 25-2. (The golfer who pulled out the rule book was also a sometime ranger at this particular course.) Therefore we thought he should take an unplayable or play it as it lay, embedded. He did the latter and got the ball about 5 yards forward. In any case, if John Vander Borght is right that all U.S. organizations extend the embedded ball rule to be through the green, then in hindsight he should have been able to take free relief. If there was ever a course where the embedded ball rule should be allowed in the rough and common sense were to prevail, it's this one. The course is often very soggy, as it was that day.