After much reflection and review, I've made the determination that I shouldn't comment on fleet racing situations late on a Friday night when I've been studying for team race umpiring the next day. I was completely wrong in this situation. Mea maxima culpa.

Green is the inside boat. Yellow owes her mark room and must gybe when she (Yellow) enters the zone in order to provide Green with sufficient mark room, which includes room to gybe.

Something that's not obvious in this case is that the zone around the RC boat isn't circular, but boat-shaped and consequently much larger than my original diagram. Here's the diagram with the zone shown around the boat (light blue shading).