MMM's tactic of being able to live off dividends from his Vanguard funds would require much more assets than the 4% rule requires. Dividend yields from VFIAX are not that high. If you want to use the 4% rule you'd need to sell shares periodically in addition to taking cash from the dividends.
Vanguard's selling restriction is that if you sell shares of a fund, they will not allow you to repurchase shares for the next 60 days (or is it 90...?) within the same account. You can still sell some VTSAX in your IRA, then buy the same thing in your taxable account, since for their purposes they are separate. Excessive churn in people's accounts leads to higher costs for Vanguard, and this tries to limit that.
Vanguard used to have 1% redemption fees on some funds if you sold the shares within a certain period of owning them, like 1 year. They don't have these anymore on the funds I invest in, but it's possible there's still a few obscure ones out there with this caveat.
Other "restrictions" are based on optimizing taxes; you can break them but Uncle Sam will want a higher cut. I'll summarize them here, not necessarily 100% accurately. Don't buy fund shares then sell them immediately around a dividend payment date, since this will require you to pay a higher tax on the dividend you got. Don't sell shares for a gain that you bought within the past year. Don't sell shares for a loss if you bought any "substantially identical" shares within a 60-day period around the sell date or it will be a wash sale and you won't be able to claim a capital loss.