I've seen this called incorrectly in several games in the past week, and it's something that really bothered me today when Michigan was flagged for delay of game after advancing a punt. According to the NCAA rulebook (http://www.ncaapublications.com/productdownloads/FR09.pdf) Rule 2-7 article 2 states:
"A valid signal is a signal given by a player of Team B who has obviously signaled his intention by extending one hand only clearly above his head and waving that hand from side to side of his body more than once."
Using a signal similar to an incomplete pass is quite common, and by definition is legal. This is pretty cut and dry, I'm not sure why multiple officiating crews struggle with it.