That's an interesting example, if he positioned for a safe landing I would say that he passed that hurdle. Yes, circuits are trained during PFLs as they can provide you with several clues that (can) assist you in getting to that short final position at the right speed and altitude. In the end, what counts is if you can save yourself from the situation of an engine failure. Getting the aircraft to short final for a suitable bit of land, having done the troubleshooting, preparation for the landing and letting people know about it should be a pass in my book.
Just my two cents of course.
I can understand that people will be more reluctant to do what is effectively a skills check with an examiner, but remember that you've already provided proof that you can fly during your original exam. Any profcheck is just a confirmation of that, nothing more. It can't take away your license, worst case is that you'll have to do a bit of training if you really mess something up.