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It seems to me that the only potential energy that can be used is the potential energy that belongs to the system being analyzed.
In this case, the ball does not own the gravitational potential energy, Rather, that potential energy belongs to the earth-ball system.
Ignoring frictional losses, that decrease in potential energy of the earth-ball system shows up as an increase in the translational and rotational kinetic energies of the ball.
Of course, being a relativistic mass proponent, I say the mass of the ball increases by an amount equal to its total kinetic energy increase divided by c^2.
As I understand the anti-relativistic mass viewpoint, the mass of the ball increases by an amount equal to its rotational kinetic energy divided by c^2 (because in a co-moving frame of reference the ball has no translational kinetic energy but does have an increase in its rotational kinetic energy). This increase is one example of a varying "invariant" mass.