The correct answer to the Handstand Released to Prep quiz is the the skill is first Legal in Level 6 as performed. Release move rules says:
the bottom of the dip will be used to determine if the initial position was inverted
In the video the top person was dipped so low that she was no longer inverted at the bottom of the dip. This means she went from a non-inverted position, pass through being inverted, returning to a non-inverted position, also known as flipping. Flipping entries aren’t allowed until Level 6, giving us the correct answer.
This ruling and explanation are based on the 2016-17 version of the rules dated August 31, 2016.