I think the whole lights on thing is a little better than asking your passengers to keep a look out for aircraft (latest flight safety) if I got on a boat and the captain asked me to keep my eyes out for other boats, rocks or icebergs I would politley step straight off that very boat. A bus driver doesn't ask you to keep your eyes out for small children and stray dogs.
There may be a lot of people that seem to be happy with asking their passengers to look out for other aircraft and I accept that it would improve safety, but I will draw the line just before that point and allow my passengers to relax during their flight.
Willie