The applicable rules:
6.05 A batter is out when-
(a) His fair or foul fly ball (other than a foul tip) is legally caught by a
fielder;
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.
IN FLIGHT describes a batted, thrown, or pitched ball which has not yet
touched the ground or some object other than a fielder.
From the about rules quote, can I assume that the ball in my example
is still "in flight", even though its resting on a fielder's tummy,
and can therefore be picked up by a fielder to putout the batter?
Yes you may assume that