This came up at a local non-sanctioned event this weekend. I am sure the question has been addressed in the past. I was the TD and made what I feel is the correct call.

The basket was on an overhang. In this case it was on the top of a baseball dugout that is no longer in use. It could be on a rock.

The disc came to rest inside the dugout and under the basket.

The player played it both ways.
--- pitched out and dropped in. (This is what I felt was the correct way to play it)
--- marked the lie above the disc and beside the basket. Crawled onto the top and dropped in. Just didn't seem fair to me. "Rule of verticality" was what they thought may come into play. I could only find OB problems associated with ROV.

What should have been the correct call?

Pitching out is correct. No verticality except for OB as you said. It's no different from situations where a basket is perched on a cliff with an under cut.

The closest answer is in the Rules Q & A 2006.03 where it says that if you land on an in bounds bridge, you mark it on the bridge and play it from there, but if you land in bounds under the bridge you play it from under the bridge.

Playing it both ways and asking the TD is always the smart thing to do.