Stop and Look at the Language Straightforwardly
They are two different ideas here: "where it can best be seen" prescribes the POSITION of the light; "all around white light" prescribes the DESIGN/TYPE of the light. Don't read further until you see that this is true. Go back and read as many times as necessary, until you recognize this obvious distinction that you never noticed before.
Many are confusing the meaning of these two phrases: they want to understand "all around" as the POSITION, when it is the DESIGN/TYPE. The position has already been prescribed in the first phrase. "All around" and "white" are not PLACES. They are CHARACTERISTICS of the light fixture.
Show a ten-year old a drawing of a burning barn lantern next to a lit flashlight. Ask him to identify which one is an "all around light." I'm putting $100 on the table, betting he'll choose the lantern: any takers for the flashlight? I'll play as many times as you want with fresh kids each round, until you run out of money or wise up.
The reg. is not saying the light must be seen, unobstructed, from 360° (if that's what it means, it's a damned awkward way to be saying that when it would be clearer to just prescribe that the light "must be seen from an uninterrupted 360° arc."
Consider that the regulation has no problem specifying minimal effect when it wants: the DISTANCE from which the light must be seen describes the phenomenological effect of the light, but that's not the language in this case.
No, the phrase "all around white light" describes two CHARACTERISTICS of the DESIGN/TYPE of light emitting device; to wit, the light itself must, by its design, radiate "all around", i.e., 360°. Then that all around light is to be mounted "where it can best be seen." The word "best" assumes that there might (will be) be incidental angles from which the light CANNOT be seen. There's no reason to prescribe "can BEST be seen" if the light MUST be seen 360°.
The language allows for practicality.
My paraffin lantern is an all around white light. I mount it in a highly conspicuous place, one of a few places where it might "best be seen." Usually I prefer running it up the flag halyard to rest underneath the starboard spreader, with a line running from the bottom bail to check its swing. Other places I've used it include under the boom/over the dodger, and rigged just under the fork of my split backstay, which for me leaves it just over head's height if I'm standing in the cockpit.
I believe my all around white light is displayed where it can best be seen, and meets the regs. Talk of avoiding the obstruction of the mast is not language found in the regs: it's deductive reasoning based on a faulty understanding of "all around white light." I believe the phrase "can best be seen" not only allows for, but assumes, a below-masthead position, which many, if not most, us us agree is more conspicuous to nearby traffic than a sole white masthead light.
Fair Winds,
Jeff