This is the SEC's stance on the play in question (From Roger Redding - SEC Head of Officials via Chuck Dunlap - SEC Director of Media):
LSU FAKE FIELD GOAL CONVERSION
Rules-in-Play
Question: Does Rule 7-2-2a apply?
"When a backward pass or fumble is caught or recovered by an inbounds player, the ball continues in play." EXCEPTION: "On fourth down before a change of team possession, when a Team A fumble is caught or recovered by a Team A player other than the fumbler, the ball is dead. If the catch or recovery is beyond the spot of the fumble, the ball is returned to the spot of the fumble. If the catch or recovery is behind the spot of the fumble, the ball remains at the spot of the catch or recovery."
Answer: No, because:
Rule 2-10-1 defines a fumble as, "A fumble is any act other than passing, kicking or successful handling that results in loss of player possession."
[Note: The word 'lateral' is not in the rulebook.]
ALSO
Rule 2-19-2a defines forward and backward passes as: "A forward pass is determined by the point where the ball first strikes the ground, a player, an official or anything beyond the spot of the pass. All other passes are backward passes."
INTERPRETATION
Since the play in question was ruled a backward pass, it is not considered a fumble as defined in Rule 2-10-1, thus giving LSU an opportunity to advance the ball. The exception in Rule 7-2-2a does not apply to a backward pass.
LSU FAKE FIELD GOAL CONVERSION
Rules-in-Play
Question: Does Rule 7-2-2a apply?
"When a backward pass or fumble is caught or recovered by an inbounds player, the ball continues in play." EXCEPTION: "On fourth down before a change of team possession, when a Team A fumble is caught or recovered by a Team A player other than the fumbler, the ball is dead. If the catch or recovery is beyond the spot of the fumble, the ball is returned to the spot of the fumble. If the catch or recovery is behind the spot of the fumble, the ball remains at the spot of the catch or recovery."
Answer: No, because:
Rule 2-10-1 defines a fumble as, "A fumble is any act other than passing, kicking or successful handling that results in loss of player possession."
[Note: The word 'lateral' is not in the rulebook.]
ALSO
Rule 2-19-2a defines forward and backward passes as: "A forward pass is determined by the point where the ball first strikes the ground, a player, an official or anything beyond the spot of the pass. All other passes are backward passes."
INTERPRETATION
Since the play in question was ruled a backward pass, it is not considered a fumble as defined in Rule 2-10-1, thus giving LSU an opportunity to advance the ball. The exception in Rule 7-2-2a does not apply to a backward pass.