It is safe to use it that way, it's not one of the best-designed seats with ERF in mind, but it's safe as crash tested.
Unfortunately you can't change the recline when rear facing as this performs part of the anti-rebound protection. This is the case for many of the multi-stage car seats that offer ERF. It's a kind of compromise that they make to be able to offer multiple different settings.
Children aren't the same as adults and don't necessarily find the same positions comfortable/uncomfortable. They can have their legs bent like that and it's OK. Have a look at how he chooses to sit when sitting on the floor playing with toys, or sitting on the sofa watching TV, or sitting in a buggy with one of those bars on top - toddlers often like to have their legs in all kinds of different positions.
In rear facing car seats where there isn't much leg room, children might cross their legs, or rest them up on the back seat, or rest them over the sides of the seat, or just bend them. Crossing them is usually the easiest way to do it with a spin seat. You may also want to take off his shoes in the car, to keep the seats cleaner and give him a bit more space.
If you wanted to change the seat, there are car seats designed specifically for rear facing which have more leg room and have a choice of reclines, but if you want to stick with this seat you can rest assured he is perfectly safe, and probably comfortable as well - I'm sure he'll let you know if he was not!