I've actually seen this (albeit over 20 years ago now). Guy at the hold-short line keys the mic and yells "NO GEAR! Airplane short final no gear!" Controller instantly sends him around, but by then the arrival was already climbing after hearing the other pilot's call. Bob/Uncle/Sorted. Gotta love the team approach.
As far as the legal aspect (in the US anyway), my take would be:
1. Guy at the hold short line sees the problem but says nothing---morally reprehensible but legally not a problem;
2. Guy at the hold short line sees the problem and yells "no gear!"---morally correct, probably effective, and legally not a problem; but,
3. Guy at the hold short line sees the problem and says "King Air short final go around"---the good news is that you may prevent the belly landing. Bad news is that you've just issued an ATC instruction at a controlled airport. You may come away unscathed, but you'll spend some time answering questions before it's over. On the other hand, I've heard pilots at uncontrolled airports say "go around" to other pilots when observing an unsafe condition. That didn't really bother me in that everybody knew it was uncontrolled...
Dave