1. W was keeping clear in situation 1 to 3, as L, the right-of-way boat, could sail her course with no need to take avoiding action and also change course in both directions without immediately making contact (see defnitio Keep Clear). Therefore, W did not break RRS 11.
2. L did not change course. Therefore, RRS 16.1 did not apply.
3. It was not reasonably possible for W to avoid contact with L. Therefore, W did not break RRS 14(a).
4. It was reasonably possible for L to avoid contact with W. Therefore, L broke RRS 14(a). The diagram states: "Not a serious damage". If this means that the contact caused damage (no need to be serious), L was not exonerated under 43.1(c). Penalize L for her breach of RRS 14(a).
5. However, if the contact did not cause damage or injury, L was exonerated under 43.1(c) for her breach of RRS 14(a). No penalty.

My bigger problem - what does I accomplish, in practice?

The line ought to be long enough that it wouldn't be to reduce congestion.  I suppose it could be to clear some potential miscreants out of the starting line, at the cost of increased general recall ( from missed initial identification) or redress (from missed return identification) potential , by sending them around the ends.

  It's not much of a discipline, though, and not useful for larger fleets, say of 25,

 where there may be a lot to identify, leaving miscreants the impression that they can hide in the crowd, so I think U works better.  In Canada the use of I (and the use of Z, however pronounced) is rare.  We tend to go from P to U, and then to Black if we have to.