Is it appropriate to confront a higher rank when they are blatantly disregarding regs?

Not only is it appropriate, you have an obligation to correct the deficiency.

I remember as a young sergeant years ago we had an in ranks inspection that was to be conducted by our CSM. Our dress was Class A. Everyone in our unit was in Class A's including the commander and 1SG. The CSM showed up in BDU's and they looked like they just came out of a duffle bag and his boots were dirty. I was in the rear but I could see him and the 1SG having some words. Next thing I know the 1SG faced us and told us to fall out for payday activities. He told us later that he felt like the CSM should have been in the same uniform as us since he was the standard. I don't know if he was right in his action but he got a hell of a lot of respect from all of us that day.

Use tact, and absolutely it is ok to let a higher ranking person know they are in violation. Most of the time they are probably not aware of the deficiency. Start the conversation with sir/maam "were you aware...." or sir/maam it is my duty to inform you that...." If they make an issue then they have a problem. I would think they would appreciate a heads up no matter the rank.

Was there someone of higher rank in the Chow Hall? Maybe approach them and tell them about the Reg and have them go with you to "help" the Ssgt. out. Seems like if you noticed, the other NCO's in the Chow Hall should have noticed as well.

I have been arround a little while and have seen a serious lack of discipline in both our military ranks and our civillian ranks. The way this Airman looks is silly and she would look silly to me as a civillian and as a civillian employer I would want someone with a more conservative/professional appearance but sadly that is not allowed any more.
I have been arround for a while and when I first joined the Reserve if a male came to drill w/o a proper hair cut he was driven to the barber and scalped during chow, females if they showed up @ 8 AM like they were ready to hit the town like it was 9 PM with thier faces caked with make up they were escorted into the latrine and made to wash thier faces. Both Male and Female Soldiers were then given counseling statements.
Now we are giving into "their rights." It is messed up. Everything is somehow about someone's rights. I remember in college a kid with a large amount of body jewelry/facial piercings (HUGE EAR GAUGES) went into the career center and was whining about "no place wanting to hire him." He claimed they call me for interviews, they meet me then they never call back. The lady who was probably 45 said to him "you might want to consider a more conservative look" or "getting rid of the facial jewelry" the kid complained that "she was judging him" but she was just being honest and explaining what the employers probably wanted.
I think we need to be harder on our new troops and make them meet the regulations.

It is appropriate but must be done tactfully

It may not seem like the correct thing to do to some, but it's your duty to address the issue. Before addressing the issue, you would first need to check the appropriate regulation to see if you were correct. Once done, then you could address the problem. With the 2-star in the same building, I would have suggested going up to the SSgt and asking her if you could speak to her outside. I would then move away from the building to make sure that the conversation wasn't heard by the wrong people. After that, in a respectful way, state why you wanted to talk to her and what the regulation states. It will be received well or it won't. Everyone should should be held to the same standard.

I would have asked a NCO to square her away! NCO's love to square away officers!

You should absolutely say something, you just say it with tact. Don't think because of your rank that you can't correct someone of a higher rank. Like CSM Stuart C.O. said, just make it into a question. If the person senior in rank to you gets onto you, then inform your chain of command and let them know the situation.

If they are out of regs, they're out of regs and being a senior ranking service member, they should know better. So yes, it is more than appropriate to confront them. I'd recommend doing it tactfully, don't just announce to the world how jacked up they are. It also pays to have a copy of the order on hand because the biggest thing someone will do when being challenged is say "Show me in the order where it says I can/can't do this". So even before I think of correcting them, I first make sure I have the documentation to prove it and second make sure that I am 100% not jacked up.

But I also wanted to say that I didn't think it was lipstick in the photo. It looks like a goofy out of regs moustache which on a female would still be funny.