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I made a ruling today that I am not confident in and would like to have clarified for the next time it comes up.

A hero attempts a rescue, and an evil character defends.
The evil character has initiative and plays a banding card.
Initiative passes, so the hero plays a card that negates the banding card and places it beneath the opponent's deck.
This sends the second evil character back out of the battle, so initiative passes, and the evil character plays a card that interrupts the battle and removes all cards in battle from the game.
What happens?

1) The hero, evil character, and both interrupt cards are removed from the game while the banding card is on the bottom of the deck and the second evil character is in territory.

2) Every card that had entered battle (hero, both evil characters, and all three enhancements) are removed from the game.

3) Every card except the second evil character is removed from the game.

I ruled that it was #1, but I can come up with arguments for why it would be either of the other two. Please only post if you're certain of the ruling since I have enough reasoning in my head for any of the scenarios!

Thank you,
Ken

Interrupt the battle will interrupt the last enhancement played by an opponent. In the example you provided that is the negate that stopped the band. When that negate is interrupted the band enhancement is returned as well as the character it banded. Then all cards in battle are removed the game.