Straightforward Rule 11. Both boats gybed, therefore new Overlap - so no R17 limitations. The presence of the Mark (Committee boat) is irrelevant. Red could sail up to head to wind, or until Green becomes clear ahead - R12. Even when Green becomes Clear Ahead, Red's course can be for the pin end of the line - although once Green is Clear Ahead, Green can sail direct for the line or until a new overlap is established (at which time Green would still have to Keep Clear of Red and Red could once again sail for the pin end).

I think we need more information.    At position 1 red is overlapped.  How was this overlap established?  From clear astern, within two boat lengths? Or some other way?  

I’m sorry early morning before coffee. I missed the gybe.  RRS17 limitations do not apply, so there is no proper course requirement 

Agree Rule 11 applies,
also if you were thinking mark rounding Red is the INSIDE boat of the pair for the boat end so she is entitled to room.
IF Red tried to sail Green past the pin end, well then you get into a mark room situation there.. 

I am a) assuming that this is a dead-downwind finish with a reasonably square line and b) the protest was at position 3 (not 2), so I am assuming that Green gybed first.  Based on that, I believe Stewart and Paul are correct here; R11 with no R17 limitations.  Another way to think about it is if both boats were a bit further to the right and Red never entered the zone, Rule 18 is absolutely out of play and Red can do what she did (so therefore you can view Red as being arbitrarily in the zone since the mark in question is not a rounding mark and therefore shouldn't 'hurt' Red).  However even if you want to argue that R18.1 is on, then it appears 18.2(b) applies, therefore a) Red never left the zone so Green has to keep clear in the diagram as depicted and b) "Proper Course" may very well be a "heated up" course in which the boat will sail faster, and therefore arrive at the finish sooner (i.e. in this case you can't presume "proper course" is as close to the mark as possible, as you would in a rounding).

This is to cross the finish line NOT round a mark.
If I am not mistaken, Green should not have gybed. That would keep green on Starboard and Red as the keep clear boat on Port. Green could have sailed its course, and red would have to keep clear.  
Even if red had not gybed it would still have to keep clear due to being windward boat.
By Gybing, Green gave up its rights and would need to keep clear of Red.

Catalan
From case 9
There is no rule that requires a boat to sail a proper course.

So Red after gybing can basically sail where she wants (provided she does not break RRS 14,15,or 16) and Green a Windward boat must keep clear.

Mark-Room
Room for a boat to leave a mark on the required side.
Also,
(a) room to sail to the mark when her proper course is to sail close to it 

However there is no requirement to sail a proper course

In your scenario green is Windward and must keep clear of red as required by RRS 11
 I hope this is helpful. 
Paddy

Assuming that downwind was not the quickest way to the line then green's move was to luff a little at position 1 before the zone and then perhaps sail by the lee to the finish so as to give mark room at the committee boat to red. That way she might of been first over the line

@Catalan, we definitely need to know what happened with the gybes, I see no reason why green would gybe first and give up starboard and control. If red gybed first, I would say red penalty. 

Peter. Why would it matter? The boats are not close and if Red gybed first into a KC position, Green appears to have gybed of her own volition. Sure, we don't know what happened, but it looks likely that either Green misread the situation or plain made a mistake (hence the "protest") or figured she could accelerate ahead by gybing and reaching. But in any event, the order of gybing is irrelevant since they ended up significantly apart and on the same tack. Now if Red gybed then turned agressively towards Green, who was forced to take evasive action, then maybe she infringed the definition of "Keep Clear". But I think Green protested in the belief that Red must sail directly to the committee boat end of the line in the mistaken belief that was her "Proper Course" and that she was obliged not to sail above that "Proper Course" (but we all know that "Proper Course" is not relevant here).

Wait, I just thought of another assumption I was making based on Peter's question (as in why would Green gybe and give up control of the situation?)... it appears in the drawing that red was going to squeak by and make the finish at position 1, but that's an assumption; what if there was a strong-enough current pushing both boats to the left towards the RC boat such that Red was actually not going to make the mark (boat) without having to gybe but Green was?  If you assume that is the case, another way to view position 2 could be that both boats gybed the instant Red owned the mark to give room (since Red got there first per 18.2.(b) while they were on the same tack).  If that is the case, I could certainly understand why Green would be upset and think she was fouled at 3, but I still think that since Red appears to have stayed within the zone (per drawing), Green was required to remain clear (but only until such a point Red left the Zone).  

If that is the case and these are either one designs or equally rated, gotta admit... makes for an interesting turn-about at the finish!

@Stewart, I completely disagree with your significant assumptions of how the gybes happened, all we need is info on how that happened. I sure hope you wouldn’t make those assumptions in a protest room, vs asking the questions and getting testimony. 

Peter - If Green gybed first and Red followed, then there is no issue.  If Red Gybed first - so what? As I said above, Green appears to have gybed of her own volition and unless Red infringed the definition of KC, or R15 (and I can't see how R15 could apply since the only way Red gains ROW is because of Green's actions) or R16.1 (for which there is no evidence in the drawing or text) then she hasn't broken a rule.  There is no evidence from the drawing that Green had to crash gybe to avoid Red. 

The author seemed to think that Red's rights were relating to Mark Room and failed to address the fact that Red is ROW. And the author seemed to think that Red was somehow restricted to sail to the committee boat as though she were rounding a Mark (which she is not). And the author seemed to think that Red is bound by a requirement to sail a "Proper Course" direct to the committee boat (which she is not).

I think this scenario is simply an example of a skipper misunderstanding rather a lot of issues - especially the difference between Right of Way and Mark Room. Then there is the misunderstanding of when "Proper Course" is in play. And, even if Proper Course had been in play (if R17 was in play) Red could choose the pin end as her Proper course.

Finally, we aren't in a Protest meeting and we can't ask questions to hear testimony - we have only the drawing and the nature of the question to go on (and I would say that the nature of the question tells us all! - "Mark Room " and "ProperCourse") But who knows, perhaps there was another boat that forced Red to gybe, who then forced Green to crash gybe, then Red returned to the course shown at P2.

So if you can imagine a scenario, consistent with the drawing and words in the question, where the decision revolves around the order of the gybes - - -?

Otherwise, as I said in the very beginning "Straightforward Rule 11".  No contact, no rule broken, dismiss the Protest.