I understand the point of the rule. It is to allow the defense to be clear as to who are the elgible receivers in a formation.
Your definition of being on or off the line is a little lacking though. A player is on his LOS if he is breaking the waist of the snapper not just the player next to him. If he is breaking the waist of the player nearest him then he is not a back. I'll admit the NCAA rule that you quoted is a better written rule.
This is a formation which I haven't seen in my years. My first thought was that is was illegal but then I tried to think of what advantage could be gained from this formation and maybe there isn't any. I'm here to learn so I'll probably let this go if I ever see it.
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