Foul Tip on Steal Attempt?

 
With no outs and a 2-2 count on the batter (B1), the runner on second base (R2) is stealing on the pitch. B1 swings and tips the pitch. It is caught by the catcher, but the ball drops to the ground as the catcher pulls the ball out of his catcher's mitt as he attempts to throw to third base to retire R2.
 
Which of the following are true:
A) This is a foul ball. B1 remains at the plate and R2 is returned to 2nd base.
B) B1 has struck out and the ball stays live.
C) B1 is not out until he is retired at first base or leaves live ball territory.
D) R2 remains at 3rd base, since he successful stole it.
 
Call
A foul tip is a batted ball that goes directly to the catcher's mitt and is legally caught by the catcher. It is a strike and the ball is in play (NF 2-16-2).
 
In the play below, since the catcher caught the batter's third strike, the batter is out and the ball remains live. The catcher then dropped the ball as he transferred it to throw, so the ball remained live and R2 remains at third base.