In summary, this is how it works.
Squadron A (Advancing Squadron and thus the attacker).
Squadron B (Interdicting Squadron and thus the defender).
Neither squadron's hex is lit up (C2.15).
Squadron A attempts to advance into enemy territory.
Squadron B Interdicts.
Squadron A's choices are to accept or decline. Only General RX available. No offensive RX available. (BM is not available in this case unless SQ B uses a WS,FLY or BN (See C2.10a).
Squadron B's choices are, they can AM. (BN is not available in this case, nor any other offensive type of RX). Only General RX available (C2.10a).
Possible outcomes:
Squadron A declines = it does not advance.
Squadron A accepts and wins = it advances.
Squadron A accepts and loses = it does not advance.
Squadron A's Choices are: Accept or decline. It can use offensive RX (including BM).
Squadron B's Choices are limited to General RX and defensive RX (it cannot use BN, or any other form of offensive RX).
Outcomes:
Squadron A can BM the interdiction and advance. Other outcomes are the same as Example 1.
Squadron A's Choices are the same as in Example 1.
Squadron B's Choices are the same as in Example 1, and it can use all forms of offensive RX.
Outcomes
The same as Example 1.
Squadron A's Choices are the same as Example 2. It can use all forms of offensive RX including BM.
Squadron B's Choices are the same as Example 3. It can also use all forms of offensive RX including BN.
Outcomes:
Same as Example 1.
Also Squadron A can BM and advance.
Also Squadron B can BN the BM and force an outcome as in Example 1.
NOTE: if Squadron A is retreating into their own territory, then Squadron B cannot interdict.