Basil - I was unaware of that regulation prohibiting the wearing of foreign awards by US personnel. I had seen that photo of the two USMC officers with their DFCs before, and had assumed that the medal would be normally worn after all US medals, as seen in the photo, which is our practice, but it would seem that it was only being worn temporarily as he was in the British embassy.
Seems a harsh regulation. Generally speaking in the British armed forces awards from what might be called traditional allies (USA, France, etc) are permitted to be worn, while others are considered on a case by case basis. A well known example of permission being refused was that of the Gulf War medals from Saudi Arabia and Kuwait. Going back further, a number of British personnel received Soviet medals for services during WW2. Three officers and a flight sergeant from 151 Wing (Hurricanes) at Murmansk received the Order of Lenin, but permission was not granted to wear the medals themselves.