Well see thats the difficult part...drawing a line. If that line were distinguishable and didn't vary from person to person then we could simply make it against the law (or training standards) not to use this set of corrections.
In my opinion, as someone that advocates the usage of non aversive techniques FIRST, I would say that the line between inhumane treatment and a correct is a sharp tug on the leash. Thats as aversive as I think one should get. But once again it varies. If emotions are ruling the severity of the correction (which they shouldn't never) then its inhumane no matter the correction. Why? Because emotions cloud judgement and are usually done out of frustration and not the better good of the dog or to teach him to do or not to do something.
As I've heard it many time put: a dog can do a number of things wrong but one thing right (in most cases), so why bother correcting on all the wrong things when instead you can give praise for the ONE correct action. It saves time and it saves the bond you hold with your dog.
Now as for what you should do if you see inhumane treatment. The correct thing would be to contact the trainer or owner (although most will think they know more than you). Next, maybe call animal control to report mistreatment of animals. If possible take out your cell and take a few snap shots.