When a live player shows a player out of the hand his/her cards, both players are violating one or more rules. It is pretty clear and there is really no question about it. The real question is, how tightly do you want to enforce the rules? First, let's get the formality of proving that the action is against the rules and both the person showing his/her live hand and the person viewing it are violating rules.
Robert's Rules of Poker is incredibly explicit when it says, "The following actions are improper, and grounds for warning, suspending, or barring a violator: ... Revealing the contents of a live hand in a multihanded (sic) pot before the betting is complete." I don't know how you can get more straightforward than that. While the hand is going on, if a player reveals the contents of his/her live hand before betting is complete, he/she is violating the rule.
A second rule states: "The following actions are improper, and grounds for warning, suspending, or barring a violator: ... Making statements or taking action that could unfairly influence the course of play, whether or not the offender is involved in the pot." Obviously, showing your cards to a player or looking at another player's cards while the cards are live, with or without permission, is "taking action" and could unfairly influence play. Notice, it doesn't say that the action has to unfairly influence the course of play, but that it COULD influence it. Obviously, somebody not in the hand that knows another person's cards while play is still going on could unfairly affect play in many ways, both intentionally and unintentionally. Therefore, showing your cards to another player or looking at another player's cards during play is a clear violation of the rules by both players.
Last, but not least, there is this: "The following actions are improper, and grounds for warning, suspending, or barring a violator: ... Revealing the contents of a folded hand before the betting is complete. Do not divulge the contents of a hand during a deal even to someone not in the pot, so you do not leave any possibility of the information being transmitted to an active player." While this particular rule refers to folded hands, it provides insight into the intention of the rule set, which is that letting somebody know the contents of your hand, even to somebody not in the pot, is bad because it opens up the possibility of information being transmitted to an active player and unfairly influencing the course of play.
Now that we have that cleared up, let's get to the real question...how closely do you want to enforce the rules? Of course, a tournament director can choose to not enforce the rule, get rid of the rule, etc. However, for me, it gets back to the old standby that any good tournament director lives, breathes, and dies by: "If you want to keep a friendly game of poker friendly, have a good rule set and enforce the rules fairly and consistently." To me, these are two very fundamental rules that should be a part of any good rule set. There is a reason Robert Ciaffone chose to put them right at the front in Section 1.