This is a high school game and a call was made by the umpiring crew; illegal pitch. What penalty should be applied in this case?
Same as any other illegal pitch. A ball added to the batter's count, all runners advanced one base...unless...the pitch is batted into play or the batter becomes a baserunner. Then, the offensive team coach has the option of either enforcing the IP penalty or accepting the results of the play.
There could be times that the results of the play are more advantageous, like if a runner scored on the play that would not have otherwise scored by the IP penalty.
The requirement of being "inside the lines" of the catcher's box is kind of loosely interpreted. At least for high school and ASA, I would enforce it the same as the rule about a batter being "inside the box" prior to a pitch- both feet must be in. A foot could be touching the line, but not extending out beyond it. This might possibly have a different definition under NCAA rules- and it wouldn't surprise me one bit if it did.
Also, a catcher could
begin to step out of the box before the pitch is released, but not have her foot land on the ground outside the box until after the pitch is released and that would be okay.
This should be a rare call for a couple of reasons. First, if the catcher is set-up outside the box to begin with, the umpire has the right to suspend play, not allow the pitcher to pitch and simply instruct the catcher to properly position herself, just like when a batter sets-up not entirely in the batter's box.
Secondly, this is really one call that an umpire should not nit-pick about. Of course, if the catcher set-up a few feet out of the box, it might give her team a slight advantage not intended by the rules, making the intentional walk easier for her team and precluding any possibility that the batter might actually swing at the pitch. If she's in the box to begin with, but begins to step out "just a little bit too soon" no real advantage is being gained. Just like the call when a batter steps out of the batter's box to hit a pitch, the violation should be a gross and obvious violation before an umpire calls it. If it's really close, give the benefit of the doubt to the catcher.