I don't think it's rude at all. The company will hire who they think is best (hopefully). A company that hires based on who they think needs the job rather than on the candidate's merit will likely not be in business for long. It's like being up for promotion at work; should you decline a promotion if you think that another person needs it more than you do?
The only potential situation where it might be rude is if you know you don't want the job and wouldn't take it, but just want to do a practice interview or something like that.
To me, it's pretty high on the SS list to say to someone, you shouldn't apply for the job since I want it.