Unless a class rule or some othe rule specifies otherwise, lifelines must be taut.   Other than that, that person seems to be complying with the rule.

The lifeline is not taut.  So has a rule been broken? 

About rule 49 - See case 36
About the Class Rules - See Class Rules (how to measure or offshore regulation)

The person in red is breaking rule 49 because he is facing inboard. I remember years ago, being on the helm of a 6m during West Highland week sitting to Windward. It was extremely uncomfortable being inside the lifelines because the upper one pushed my torso into the boat. Not knowing any better, I started to sit with my upper body outside the upper lifeline.l

"On the deck" is a clear position.....and now "sitting facing" is a extrange way to be sitting

Charles Darley. The crew in red is still inside the upper lifeline. He's sitting just aft and inboard of a stantion. 

In case 36 as you know, we have the position N°4 that is ok.
My question is, can you project your upper body outside as long as your waist is inside the lower line. ???

How I might describe this is that the crew is not breaking a rule how they are sitting/hiking-out, but the boat may or may not be in violation of rule 49 depending upon if there is any CR that regulates LL tension.

(In other words, the boat may have broken a rule as soon as it started racing, before anyone even touched the LL’s). 

For instance, in the J105, we have this CR: 

Agree with the Case 36 facts presented by Catalan Benaros and the specific class rules presented by Angelo Guarino.

Tangent:
I wish the rules did not permit what is effectively droop hiking as my prior multi-decade dedication to the position of foredeck grand prix boats meant that I was expected to set the tone for everyone else.  Posterior up, head down, thighs pressing against the shear line, all weight on the abdomen.  I switched to dinghy racing after requiring umbilical hernia surgery (belly button hernia) due to what a doctor guessed was 20+ years of droop hiking.  I have wondered if it dissuades some new sailors from further participating after being told to hike harder until they are in the droop position?  I will not do it anymore and only take main trim or tactician positions, or, just sail dinghies and plank hike or hang off a trapeze.

US Sailing Safety Equipment Rules (2.4.4.1) also provides a definition of "taut" for boats not covered by a class rule. Note that a taut intermediate lifeline is less taut than a taut upper or single lifeline (5" vs 2" deflection with a 9 lb weight applied). But US Sailing also only applies these restrictions for Coastal and Ocean racing, there's no lifeline requirement for Nearshore.  

World Sailing Offshore Special Regulations (3.14.1) have a similar rubric.

I would apply 49.1 in this case. He is not being supported by a lifeline but something illegal that is obviously designed to support his body outboard. In addition, I cannot see an upper lifeline where he is in the photo. Both good grounds for protest.

The trouble is class rules may come into it. I believe there are classes that permit what they call a hiking line or something which resembles a slack life line so that crew members may adopt the seasick rag doll position. I'm a dinghy sailor so I suppose I shouldn't comment, but I really have doubts that requiring crew to adopt a physically uncomfortable (or worse) position where they can see neither boat, other competitors or even the scenery is a good thing for the health of the sport. But in some circles there's a sort of macho thing associated with it, as indeed there used to be with weight jackets in dinghies until they were thankfully finally banned.

Lifeline tension is also covered in the World Sailing Offshore rules.