Final Answers 1- Yes. As long as the ball does not touch the ground or part of the stadium (ie the wall, pole, etc.) it is still considered "live". According the rule 2.0, definition of a catch, a player may finish a catch started by another fielder.
2- No The runner is allowed to take off from any base as soon as the ball is contacted by a fielder. The runner is forced to wait to leave the base until the ball is caught by rule 7.10. However, by definition (rule 2.0, definition of an out) the out starts the moment the ball is touched. If a fielder bobbles the ball and catches it, or another player finishes the catch, the moment it is first touched is the beginning of the out. This rule is put in effect to keep an outfielder from purposely bobbling or juggling a ball to keep a runner from advancing.
3- No Since the out was made by Cabrera, he did not cost the team an out or prolong an at bat. The fact that Baldelli scored does not effect this since you cannot assume a double play. Not only is he not given an error, but he gets awarded an assist. In the case of a bobbled ball where Damon makes the catch himself, the official scorer would make a decision based on wether he felt Baldelli would have scored regardless of the catch being made. Given Baldelli's speed, the deepness of left-center in Yankee Stadium, and Damon's arm; Damon would most likely not have been charged with an error if he had caught the bobble himself.
Rule 2.0, definition of a catch:
A CATCH is the act of a fielder in getting secure possession in his hand or glove of a ball in flight and firmly holding it; providing he does not use his cap, protector, pocket or any other part of his uniform in getting possession. It is not a catch, however, if simultaneously or immediately following his contact with the ball, he collides with a player, or with a wall, or if he falls down, and as a result of such collision or falling, drops the ball. It is not a catch if a fielder touches a fly ball which then hits a member of the offensive team or an umpire and then is caught by another defensive player. If the fielder has made the catch and drops the ball while in the act of making a throw following the catch, the ball shall be adjudged to have been caught. In establishing the validity of the catch, the fielder shall hold the ball long enough to prove that he has complete control of the ball and that his release of the ball is voluntary and intentional. A catch is legal if the ball is finally held by any fielder, even though juggled, or held by another fielder before it touches the ground. Runners may leave their bases the instant the first fielder touches the ball. A fielder may reach over a fence, railing, rope or other line of demarcation to make a catch. He may jump on top of a railing, or canvas that may be in foul ground. No interference should be allowed when a fielder reaches over a fence, railing, rope or into a stand to catch a ball. He does so at his own risk. If a fielder, attempting a catch at the edge of the dugout, is "held up" and kept from an apparent fall by a player or players of either team and the catch is made, it shall be allowed.
An error shall be charged for each misplay (fumble, muff or wild throw) which prolongs the time at bat of a batter or which prolongs the life of a runner, or which permits a runner to advance one or more bases