Sorry - this is a bit late, but...
IMO there can be no such rule in general...
In some applications, fusing is dangerous (eg, high current DC systems; usually above 3,000A), and I have seen several instances where adding fuses (especially within 12" or 18") has INCREASED the hazard risk!
IMO the rule should be that adequate protection is provided.
Protection is usually via 2 means - "physical" (as with the starter-motor wire that is almost always un-fused (in typical and non-modified situations) yet it carries typically a few hundred Amps) and (2) "fusing" (including circuit breakers, or temperature or current-sensing trips etc).
The fusing "within x" of a battery" should be read as "as close as practicable to the battery" (without itself causing a hazard). (FYI - in some applications, fusing is NOT allowed in the same room or compartment as the batteries.)
Many installations do not have fusing and are considered quite safe - eg, dual batteries in engine bays where the interconnection is a copious gauge heavy insulated wire, maybe through additional insulation like garden-hose or a plastic-tube, else additional physical protection (metal conduit to prevent insulation crush in accidents etc).
As to certain car-competition rules that allow battery isolation switches to be in the hot (+ve) battery circuit with the isolator switch in the cabin - or worse, a remote rear corner - ah well, that's their funeral. As to those that mandate that situation (eg, if the isolator also has to kill the engine)... IMO stupid and risky. (Battery ground isolation is what should be used, but this won't kill an engine. But IMO "engine kill" and "battery isolation" are two separate requirements. They can be interlocked, but that requires complexity that stretches reliability etc.)
[ By isolation switch I man a full-current carrying switch - not a switch that control remote relay(s) - but they have reliability and hence other safety issues too. ]
Sorry for this delayed reply -cum- hijack. But if enough people understand the issues, maybe one day the Rules will be modified appropriately. (Alas I recall when certain scrutineers claimed that ground isolation was illegal! Related regulations/rules have since been notated (or changed) to allow the far safer ground isolation.)