Gains after the stock is distributed from the plan are ordinary appreciation, not deferred income, so the cost basis to the surviving spouse in a community property state should be the date-of-death [edited] value of the stock minus the NUA. (I was originally going to state that in my first reply, but not realizing that that was the crux of the question I chose to omit it.) If the value of the stock drops below the NUA, I don't think that the cost basis can be below zero. If sold when the value is less than NUA, there is just less taxable income.
Consider the degenerate case where one does an NUA distribution where the NUA is equal to zero. Whatever step-up in basis the surviving spouse gets if there was no distribution of NUA the surviving spouse should also get if there was an NUA distribution where NUA is zero. Having called it a distribution of NUA shouldn't make any difference in the cost basis to the surviving spouse. You could even wash out the NUA characteristic by after distribution immediately selling the NUA shares (at the distributed share value) and repurchasing the shares at the same price.
