May fielders line up to begin a play in foul territory?

No. Rule 14.03 states "Prior to the kick, no participants (or spectators) may be in the sideline area except for the kicker, the catcher, Referees and designated base coaches." The sideline area is defined by Rule 1.03e: "the sidelines are lines 10 feet on the outside of and parallel to the foul lines, the area between the foul lines and the sidelines is the sideline area. Violations of this rule can be considered Position infractions (see Rule 8.02).