Generally speaking, you want the fuel regulator as close to the carburetor as practically possible. At the very least in the engine bay. That way, you can make necessary adjustments without crawling under the car. lol
Not to mention they physically work better that way too! Having a long rubber line feeding back to it is asking for bouncing or pulsing pressure. Mechanical regulators don't like momentum.
I bet there's something screwy going on with it, either being used as a return regulator with a sketchy bulkhead fitting. If it was setup as a deadhead, it would be so much eaiser to mount it at the carb.
Looks like there might be a fuel pump under the reg too, but it's tough to tell.