Radix said no going outside the boundaries of the games for any extended period of time, but that's if you're going for speed I think. I'm pretty sure it counts if you're going for a low percent. This glitch might not count as an "extended period of time" though, I think he meant just secret worlds were not allowed. I'm not sure though, ask Radix.
I *think* it was allowed. Outside the world means a whole screen outside, not wrapping around (even if that normally wouldn't be possible). The main thrust of the rule was the ol' LttP trick that gets you from the basement of Hyrule Castle (at the beginning!) straight to the Triforce, without even having to go through Ganon.