Lizardmatt said:
That's actually not correct. Impact hits and the egg go at the start of combat. A challenge happens after impact hits, which would mean it happens after the egg.
Stomps and thunderstomps also affect units, but have been FAQ'd to only hit the model in a challenge.
This is not an entirely correct interpretation either, as the Egg does not make impact hits. The Egg is cracked at the start of combat, which is the same time that the challenge happens. Unless the Egg has the impact hits rule, it does not happen before the challenge, but rather, at the same time as the challenge.
If you don't use the egg at the start of the fight, get into a challenge, and have the challenge continue to a 2nd round; you could make a case for the egg at that point hitting the model in the challenge.
I would take to your opponent about it before the game, decide how you want it to work, and plan according (ie, use it first round of combat if you don't want the hits going into the challenge).
You could argue that the Egg could be brought into a challenge into a subsequent rounds, but I don't think the wording of the Army Book supports this. The Egg nominates one unit in contact with the bearer or his unit, and the unit suffers the damage. The character doesn't even need to be in contact with the enemy for the item to work. You nominate a unit, and that unit takes the damage.
I would agree with Lizardmatt. Once in the challenge, the Egg would work like a Breath Weapon, which affects only the opponent in the challenge (according to the latest FAQ: "Q: If a model with a Breath Weapon, Stomp or Thunderstomp is in a challenge, can these attacks hit models not in the challenge?(p102) A: No.")
If the Egg were a breath weapon or stomp attack then I would agree with this. It is not, however, either one of these. It is a magic item, which sets it apart from impact hits/ breath weapons/ stomps. Again, if you follow the wording of the item, you nominate a unit and that unit suffers Xd6 hits.
I understand why it could be viewed as something similar to an impact hit, stomp, or breath weapon. It is, however, a magic item and should be viewed as a unique set of rules specific to itself.
This is another example, I believe, that the army book's rules were hastily written and open to far too much interpretation. I could be wrong about this interpretation, but I think that an FAQ is needed to clear up some of these issues.