Hi Kevin,
Prior to iPhone OS 3.0, the UIScrollView's hitTest:withEvent: method always returns self so that it receives the UIEvent directly, only forwarding it to the appropriate subview if and when it determines it's not related to scrolling or zooming.
I couldn't really comment on iPhone OS 3.0 as it's under NDA, but check your "iPhone SDK Release notes for iPhone OS 3.0 beta 5" :)
If you need to target pre-3.0, you could override hitTest:withEvent: in BeachView and set a flag to ignore the next beach touch if the CGPoint is actually in a stone.
But have you tried simply moving your calls to [super touches*:withEvent:] from the end of your overridden methods to the start? This might cause the stone tap to occur first.
H