I have not experienced this scenario but here are my thoughts on it. I am not sure of an overlap but at position 2, Blue is the leeward boat on starboard tack based on the definition of Leeward and Windward when sailing by the lee. At position 2.5 both boats are still on starboard tack but Yellow is probably clear ahead and now leeward boat. At position 2.75 when Yellow quickly sheets in to a close hauled course (I don't think it matters what the jib does) Yellow is required by 16.1 to give Blue room to keep clear. It looks like Blue kept clear so no rule was broken.
As far as tactics for the scenario, I don't think I can help. The worst one wants at a mark rounding is coming out the same as going in. You want to come out better. In this scenario Blue comes out much worse. Most bad things occur at mark roundings so I try to avoid confrontation. I will now wait for the scholars to give their thoughts. 

Here's my quick guess...

If overlap in position 2...
Yellow breaks RRS 11 at position 2
Yellow does not gybe.  She just takes more room than she is entitled too. (See the defintion of Mark-Room.  At that point Yellow is only entitled to room to 'round the mark on the required side'.  She is still constrained by RRS 11.)

Blue should protest.

If no overlap in position 2..

No rule broken.

Position 3

Yellow was entitled to mark-room by RRS 18.2(b) since she entered clear ahead.  She did not leave the zone, and it is her proper course to sail close to the mark, so is still entitled to mark-room.  Yellow's luff may have broken RRS 16.1, but since she was luffing to take mark-room to which she is entitled, she would be exonerated under RRS 43.1(b)

Blue's obligation to give mark-room extends even though she becomes overlapped inside per RRS 18.2(c)(2), and it good that Blue ducked behind.  No rule broken.

(If Yellow had not been able to sail her proper course close to the mark then Blue would be penalised for not giving mark-room.)

What d'yall think?

The only thing i would add to Ben's analysis is, at position 2, even if there was an overlap, 15 would protect the yellow boat at first, so, with the info given, we can't be sure if there was a long enough overlap for a RRS 11 breach.

As for what to do, as the blue boat, unless the boat that is owed room leaves the zone, stay behind them and don't go in there. She is allowed to make a very tactical rounding.

Here's my take:
First, I don's see any particular evidence of a gybe in the diagram. Both boats appear to be on starboard tack throughout. That being said:
Position 1: Yellow is clear ahead when the two boats enter the zone and therefore has right of way under rule 12 and is entitled to Mark-room. under rule 18.2 (b).
Position 1.5: Yellow alters course away from the mark, but her proper course is not to sail directly at the mark. Blue must continue to keep clear.
Position 2: Blue seems to be keeping clear.
Position 2.5: When Yellow turns back toward the exit side of the mark, Blue becomes overlapped inside her and must give her room to sail her proper course under rule 18.2 (c)(1) and (c)(2).
Position 3: Yellow appears to be close hauled, which would be her proper course to finish the race as quickly as possible. Blue must keep clear.
IMHO, Blue is in a tough spot at Position 3 because of the angle of her turn at Position 2.5. ("Doctor, Doctor! It hurts when I do this (gesture)!" "Well then, don't do that!")

I agree that there isn't enough informtion in the diagram to support the Rule 11 scenario, but worth putting on the protest form.  I'd need to read through a few cases first, but without that extra knowledge, as Blue, I would protest Yellow under Rule 2 and take it to PC to ponder over.  Some may see it as a waste of drinking time, but an interesting time...  Thinking about the diagram some more, that looks very much like the kind of tactic one might use to slow down the Blue boat while another boat caught up from behind...  in team racing!  From which you may draw your own conclusions—particularly if this was a handicap race.

Wow, Ant, that is a huge leap to go to Fair sailing. First, nothing in this question alleges that the yellow boat was doing anything untoward in this rounding. Second, even if it could be proven that the yellow boat baited the blue boat into going in there, I'm not sure it would violate fair sailing to shout the door. I also, didn't look in the case book on RRS 2, yet.

Good discussion.

A picture paints a thousand words, but not all the words.

It's true that many different scenarios could have played out to get to Positions 2 and 3.  Blue may have broken RRS15.  Yellow may have broken RRS16.1.  While sailing that course, Yellow may have been engaged in team tactics, or just be being very unsportsmanlike.  We could go on and on supposing.  While each scenario merits a good discussion, it is sometimes misleading and detracting from the original question.

Here, we have quite a lot of information.  OP provides us with a brilliant diagram (better than most), and also includes some written 'testimony' which in the absence of opposing evidence, we can take as 'fact' for the purpose of discussion.  Those facts seem complete enough (despite the incorrect use of the word 'gybed') and also notes only one instance of 'not enough room to keep clear' just prior to Position 3.  Nothing in the testimony suggests that Blue was ever overlapped with Yellow.

My original post then attempted to stick to the evidence presented (in testimony and diagram), eliminating any presumption of other rule breaches not mentioned. 

So in order to do as I preach(!) and stick to the evidence presented , I'll adjust my submission to:

Position 2

Even with my magnifying glass and ruler, it is quite difficult to call overlap or not at Position 2.

Yellow entered the zone on a line outside Blue's line, and then by position 2 was on a line inside Blue's.  For that to happen, Blue must have been clear astern of Yellow.  So, at the 'last point of certainty' Blue was not overlapped, so I would call 'no overlap at position 2'.  Shortly afterwards as Yellow luffs, Blue ends up overlapped inside again. This swings the balance of probability towards a call of no overlap at Position 2 since once again, Blue must have passed clear astern of Yellow to change from an outside position to an inside position.   While she was clear ahead, Yellow was entitled to sail the course she did.   No rule broken by Yellow.

Blue kept clear per RRS 12.  No rule broken by Blue.

Position 3

Yellow was entitled to mark-room by RRS 18.2(b) since she entered clear ahead.  She did not leave the zone, and it is her proper course to sail close to the mark, so is still entitled to mark-room.  Yellow's luff broke RRS 16.1, but since she was luffing to take mark-room to which she is entitled, she is exonerated under RRS 43.1(b)

Blue's obligation to give mark-room extends even though she becomes overlapped inside per RRS 18.2(c)(2), and it good that Blue ducked behind.  No rule broken by Blue.

A little bit different but something similar happens in Laser classes often as boats will come toward the leeward mark on starboard tack and need to gybe before rounding.  Because there is much to do in a single person boat rounding a leeward mark it is common for the lead boat to push 2-3 boats to the right as they enter the circle to give themselves time to gybe and sheet in.   Sometimes they sail 1-2 boats beyond the mark because the gybe does not happen as planned.   Now on port tack, some newer sailors will think they see a hole and try to go in, not realizing that the boat ahead will only miss the mark because they choose to, leaving the new sailor no where to go because more boats to the right of them are doing exactly as the boat ahead has done, most with cleaner gybes.  Heated conversations ensue.

I may consider withdrawing my Rule 2 suggestion.  I'm now looking at Rule 11 at position 2.  As Benjamin has said, if there was an overlap, Yellow broke Rule 11. But if there wasn't, then no rule has been broken.  Which then means one needs to ask why that course?  Did it create a situation that would benefit Yellow in that race or series, or was it for the benefit of another competitor?
However, there are other questions to ask.   How, for example, was it possible for Yellow to sail so much further (counting the dots, about 2+ lengths more to get to position 3) and yet be even further ahead of Blue than when they entered the zone?
I'm a technical writer and editor, so for me the small details and how they might be interpreted always have to be considered.

That course definitely created a situation that would benefit Yellow in that race. The difference in clear ahead at position 3 is greatly improved over position 1. Blue could have had a safe, close position just behind Yellow exiting the mark but now Yellow has a controlling position ahead with speed .

There are a multitude of possible reasons why Yellow took that course. 

-Tactically trying to tempt Blue to take room to which she was not entitled?
-Accidentally overstood her wide-in/tight-out course
-Difficulty managing sheets or helm?
-Illegal team tactics?
etc..

There are multitude of possible why Yellow's track on the diagram depicts her sailing that much further.

-A good gust of wind got to Yellow
-A good wave just as she turns down wind
-Better weight distribution on the boat
-The diagram maker was unable to depict very different kinds of boat (not one-design)
-The diagram maker's recollection was biased or faded!
etc...

I don't know if we can presume too much or in such detail.

What we can do here though is remind ourselves of WS Case 63

 At a mark, when space is made available to a boat that is not entitled to it, she may, at her own risk, take advantage of the space.

 The risk the other boat takes is that the boat entitled to mark-room may be able to close the gap between herself and the mark while sailing her proper course. In that case, the boat entitled to mark-room is exonerated by rule 43.1(b) if she breaks a rule of Section A or rule 15 or 16, and only rule 14 will limit her course if she makes a rapid and aggressive attempt to close the gap between herself and the mark. 

“Mark-Room

Room for a boat to leave a mark on the required side....”
At position 2.5, how is yellow entitled to the room she is taking? That amount of room is beyond what is required to leave the mark on the required side. Being that she held a course toward the mark before entering, it would seem hard to argue that her course at 2.5 was required round the mark. Does being owed mark room completely turn off rule 11 - windward boat keeps clear, or does it only modify it to the extent of ‘Room for a boat to leave a mark on the required side’?
What am I missing?

Hi Matt, 

I don't think you are missing anything if you believe they were overlapped at 2.5

What do you think? 

Thanks for your comments.

Prior to this scenario, the yellow boat was weaving between marks to prevent the blue boat from gaining an overlap. The yellow boat never heard of Rule 17 relating to 'proper course' and believed that she could luff the blue boat off the mark. 

In the case of this scenario, the yellow boat was trying to milk a penalty at the mark. The blue boat was just trying to avoid a collision and thought that the yellow boat was leaving he zone or tried to push the blue boat out of the zone. The yellow boat shouted that "they had all the rights." The blue boat thought that there was a route through the inside. Obviously not.

The blue boat protested repeatedly throughout the race with so success.

Benjamin - thanks for your reply. They are overlapped at position 2 even, should rule 11 not apply then? I still don’t understand why it shouldn’t - it’s not room required to leave the mark on the correct side, it’s well in excess of that. Does the definition of ‘room’ play a part in the definition of ‘mark room’, which partly reads ‘while manoeuvring promptly in a seamanlike way’. Nothing yellow did seems prompt or required for good seamanship? I feel like I must be missing or misinterpreting something. 

I think the crucial question is whether there was an overlap at Position 2 or any time after.

None of OPs text clarifies absolutely.

Grant, can you make a call. Y or N.

If overlapped, then Matt is quite right.

If not then Yellow was entitled to sail this, her restrictions as a windward boat only apply when she is overlapped.

(Matt, have a look at my previous post where I explain why, without more absolute evidence of overlap, I would have naturally called 'no overlap'.