As I read the rules and decisions, it seems to depend on the presence or lack thereof of a local rule, and it's an odd situation where the local rule seems to make things WORSE for the player... The relevant decisions are:
"25-2/5 Ball Embedded in Grass Bank or Face of Bunker
Q. Are grass banks or faces of bunkers considered to be "closely mown areas" under Rule 25-2 (Embedded Ball) and may relief be taken from them under that Rule?
A. No, not unless they are cut to fairway height or less."
which is further clarified by:
"33-8/39 Local Rule for Bunker Faces Consisting of Stacked Turf
Q. The face of a bunker which consists of stacked turf may be grass-covered or earthen. May a Committee make a Local Rule (a) clarifying that any face of a bunker which consists of stacked turf is not part of the bunker, and (b) deeming that such faces are not "closely-mown areas" (Rule 25-2)?
A. Yes. "
So if the local rule is NOT posted, then one would assume that the free drop granted under Rule 25-2 is allowable, since sod areas would by their nature be "cut to fairway height or less." One's options there are listed under Rule 25-2, and could get very interesting because one is supposed to drop as near as possible to the previous spot, no nearer to the hole. It's hard to believe one could find a spot to drop that was not in the bunker.
25-2 states:
"25-2. Embedded Ball
A ball embedded in its own pitch-mark in the ground in any closely-mown area through the green may be lifted, cleaned and dropped, without penalty, as near as possible to the spot where it lay but not nearer the hole. The ball when dropped must first strike a part of the course through the green. “Closely-mown area” means any area of the course, including paths through the rough, cut to fairway height or less. "
I'd have to guess though that most courses with stacked-sod-face bunkers WOULD have this local rule in place, and if so, then no free drop is allowable... because the ball is definitely not in the bunker, it's also not in a closely mown area (which would mean one gets a free drop, under Rule 25-2) since the local rule is posted. So the only relief is indeed taking it as an unplayable, and the options there are defined below:
"Rule 28. Ball Unplayable
The player may declare his ball unplayable at any place on the course except when the ball is in a water hazard. The player is the sole judge as to whether his ball is unplayable.
If the player deems his ball to be unplayable, he shall, under penalty of one stroke:
Play a ball as nearly as possible at the spot from which the original ball was last played (see Rule 20-5);
or
Drop a ball within two club-lengths of the spot where the ball lay, but not nearer the hole;
or
Drop a ball behind the point where the ball lay, keeping that point directly between the hole and the spot on which the ball is dropped, with no limit to how far behind that point the ball may be dropped.
If the unplayable ball is in a bunker, the player may proceed under Clause a, b or c. If he elects to proceed under Clause b or c, a ball must be dropped in the bunker.
The ball may be cleaned when lifted under this Rule."
Remember, the ball is NOT in the bunker, so the drop absolutely need not be in the bunker.
I think this is all correct.... but it's far from certain!
TH