Yes, a santee on its back is a no-no. According to the UPC, a 3-1/2" cleanout is the minimum size for a 4" line.
I don't like the reducing coupling, since I'd prefer a full 4" cleanout, and the installer should have thought of that. But we have this thing here about requiring a 4" pipe coming out of the building and many houses do not require the equivalent of 4" pipe based upon fixture units. So it's common to use a reducing coupling before the pipe goes through the foundation.
There's a bit of confusion as to cleanouts since they require a cleanout outside the building and a horizontal pipe less than 5' does not require a cleanout. So, in theory, this cleanout going through the wall doesn't even have to be there, as long as there is one outside the building. I would prefer to have a two-way cleanout in the vertical pipe and a longsweep elbow to this type of setup.