Regulations notwithstanding, this a$$hole is protected by the First Ammendment. He is using (misusing) the symbol in a satirical manner to express a political opinion, and this use is protected, just as burning the flag is protected. If the AG, SECNAV, or any one else pursued him, it would be thrown out of court. The SECNAVINST and associated regs, including Title 10 USC and the Executive Orders, can't trump the Constitution. And the bastard knows it.
Now if the jerk ever finds himself in the company of some Marines (or this Sailor), the First Ammendment will be much harder to hide behind.
Semper Fi
We'll very likely never know if you are fully right or wrong on this one--not according to law, etc.--but because our so-called "leaders" lack what's necessary (balls) to proceed and find out.
Semper Fidelis
Dick Gaines