Hmmm... well if a player squares as if to bunt and he puts his bat out over the plate and it's still there when the ball crosses the plate then, to me, I think I'd be ringing up a strike.

Beleive it or not this is called in different ways by different  umps.  Some umps consider just placing the bat out and across the plate  enough of an "offering" that if the bat is not pulled back they have a  strike. Out in our area (Chicago - West Suburbs) most umps tend to call  it like this (which I beleive is the correct way):

Batter squares to Bunt, does not move the bat, and the ball is in the strike zone - Strike

Batter squares to Bunt, does not move the bat at all, and the ball is outside the strike zone - ball

Batter squares to Bunt, moves the bat any way but pulling it back, and the ball is outside the strike zone - strike

Not sure if  your playing LL or another league but accroding to LL guidelines on this it is not a strike if the bat is not moved and the ball is outside the strike zone.

One of the guys who hangs around this board put this up sometime ago.  It explains the rule pretty well...

http://www.infosports.com/baseball/arch/2633.htm

From the definition of bunt in the LL baseball rule book:

Of course, if the ball passes through the strike zone, it's still a strike.

And the rule for LL softball is different:

BUNT is a batted ball not swung at but intentionally met with the bat and tapped slowly. Holding the bat in the strike zone is considered an attempted bunt. In order to take a pitch, the batter must withdraw the bat backwards away from the ball.

BTW, I have always taught my kids to pull the bat back if they are not going to make an attempt/offering at the ball.  That leaves less room for interpretationon the umps part.

"Their reasoning is that the "squaring around to bunt will cause the  pitcher to throw 4 balls and and the batter will soon be on 1st."

BTW, bad advice.  In the next couple of years the kids will take it upon themselves to start throwing the ball high and in if they do this.  I wish coaches would think of what they are teaching kids and ramifications it has for the long term.  Once the kids hit 13-14u or so the pitching catches up to the hitting.   Batting averages will drop and a kid that was taught just to hold the bat there will either receive 3 quick strikes on the outside low corner of the plate or will be subject to having to duck quickly out of the batters box.

Their reasoning is that the "squaring around to bunt will cause the  pitcher to throw 4 balls and and the batter will soon be on 1st.

Now, there is some quality Coaching on display right there....

As far as the game goes, that sounds like it would make for a rather boring game (save for the part when these "kids" make it up to the next level and these learned tactics result in an up-and-in heater to the ribs.......).  But I digress.

I was going to point you to the relevant parts of the Rulebook (Chapter 2) dealing with the definitions that would settle this, but a later post had a link to an older reply by Rich that covers it very nicely.

Just holding the bat out there does not automatically result in a strike.  If the ball comes in within the strike-zone, ring it up whether an attempt was made or not.  If the ball comes in outside the strike-zone, rule on the actions of the batter ; an attempt = strike, no attempt = no strike.