MOSFET Vds and SOA graph
What I am trying to understand based on the assumed position on the
SOA graph is this will also be outside the RDS(on) limit line for the
graph.

This line just shows you where RDSON limits current, ie. operation in the area 'limited by RDSON' is impossible because RDSON is too high to support that current at that voltage (even though it is inside the Safe Operating Area). Your operating point is at RDSON and well inside the SOA, so you have nothing to worry about.

So is this an impossible situation? or will the Vds be higher? or Does
the RD(on) line go horizontal once it exits to the left on the SOA
graph?

If you are wondering why extrapolating the line doesn't precisely line up with your dot, it's because RDSON is not a fixed value (it varies with temperature, threshold voltage etc.) so the numeric specifications and graphs may have slightly different values. Nothing should be inferred from this. Characteristics vary from unit to unit so the graphs only show 'typical' or guaranteed minimum/maximum values. They are not intended to be precise.
You should base your power handling calculations on the specified maximum RDSON and maximum acceptable operating temperature (which for reliability should be much less than 150 °C) at your operating point. That gives you the worst case, so just make sure it is well inside the maximum ratings and everything should be fine.