@TheOldBallGame I would rephrase your question to say "show me where in the rule book is says it is illegal?" I don't mean to be confrontational, but rules can't cover every what if, even rule books as big as the NCAA's. I would say, show the rule that says it is illegal.
To reinforce the fact it is not illegal, look at the volleyball coaches at Stanford (I am using volleyball because this is where it has been happening the longest). Both the paid Assistant Coach Jason Mansfield and Volunteer Assistant Coach Kasey Crider coach at Vision Volleyball Club in a town less than 15 minutes from the school. The Club Director Joe Ripp's wife was an assistant coach at Stanford for years.
This is all to say, if a major DI program like Stanford has assistant coaches from their nationally ranked team coaching club teams in the area, it probably isn't illegal.
It might not feel like it should be legal, but given the number of schools doing it, it most certainly is.