Yes it is.

If you look at the history:

Interrail was not valid in your country of residence at all (normally you just got a discount on the ticket to the border/airport. In 2016 they allowed to mark two travel days as in-/outbound day, which just means, on that travel days you can also travel in your home country. (Actually the intention of that was to use the outbound day to leave your place to the border/airport and on inbound doing the opposite)

In your situation I would recommend to travel through switzerland, from Strasbourg to Graz (or opposite). This also gives you the chance to visit Colmar which is along this line.

I second the suggestion of @runner.on.rails 

Just transit via Switzerland between Vienna/Graz & Strassbourt to avoid germany :)

Take a TER from Strassbourg to Basel
Basel - Zürich any train
From Zürich a Railjet to Vienna / a Railjet/Eurocity to Graz)
or ofcourse opposite.

Interrail/Eurail and ÖBB are checking on this topic and they will give us more information soon, but I don’t think it is possible to use Interrail in transit in your home country. 

You could use the Nighttrain “Nightjet” from Vienna to Zürich and from Zürich IC service to Basel and from Basel TER to Strasbourg (you need for this 2 travel days). 

Back to Graz same till Zürich and from there Nightjet to Graz (only 1 travel day, because you don’t change trains after midnight). In the opposite direction 2 travel days. 

Or buy a separate ticket Basel SBB - Strasbourg (here), price starts at 10€.

Why Basel - Strassbourg? :)
The Nighttrain arrives in Zürich :)

Means to avoid the second travelday to book Zürich - Basel - Muhlhouse - Strasbourg.

Oops, my bad...