And another thing, Rossi himself said he doesn't know why he does it but it just feels right.
To me that right there puts it in the "form" ballpark. People do lots of different things with form, and while the fundamentals are similar there are idiosyncrasies that arise from what "feels" good.
Regardless, who are these people to interpret what feedback Rossi gets from sticking his leg out? Are they riding and braking at his pace... er, no.
Personally it reminds me of the bar a tightrope walker uses. Except the plane of rotation in question here is around the center of the bike and parallel to the ground. Under really hard braking bikes get squirelly, who's to say if this leg doesn't counterweight or provide better feel against some of this rotational tendency.
Bottom line, Rossi is as Rossi does. The guy is a spectacle.