The sketch is a transitory object. It only exists as a precursor to the edit operation. An edit sketch is a means for an user to manipulate a geometry (shape.) A geometry is a property of the feature (row in a featureclass.) So basically to create a new feature, you start with an empty sketch, you add vertices to the sketch to create the sketch geometry. When finish sketch is invoked, an edit operation is started, a feature is created and it's shape property is set to the sketch's geometry and the edit operation is completed. The sketch is then discarded.
So if you want to click a button after a feature has been created, you need to run it off the selection (what if the user clicks on the button when no sketch has been done, what if the sketch was used to modify a feature, etc.) You could also listen to edit events after a feature was created or added. Regardless you need to get the geometry from the feature (selection or edit event) and use that to do your select by location. You can get the lines that intersect the polygon by doing a query with a Spatial Filter (do a search cursor on the line featureclass with a spatialfilter as a query filter argument.) The get all the geometries of the line features, merge them together (union) and split the polygon feature (Ifeatureedit)
