A rule breaking infinite is doing an infinite when ur not supposed to. Nightwolf's corner 3 kick combo is the most obvious because theres a gap between the last kick and the start kick and you cant block in it.
Yeah it's a 1.1 UMK3 glitch. It's not the AI that is the problem exactly, it's that you can do the freeze in this manner in 1.1 and not in 1.2 So the AI itself isn't the problem so much as being able to use the freeze without punches being counted between hits, or just the fact that the freeze seems to be disabled in that scenario. There are other moves with weird restrictions, like you can't do Kabal's spin or Jade's Dash kick for example in certain situations, like after specific blocked hits or during certain jab animations.
A rule breaking infinite would be like, Human Smoke's combo break, there's no reason at all that should exist.