DFC, is absolutely correct that an FI should be able to pick up any dangerous 'tendancies' even on a few circuits.
Since most people are likely to kill themselves because of their attitude towards flying rather than their skill level, this is something you can see easily in how they plan and pre-flight the a/c. This is as almost as important as how they fly when you are on board.
I personally feel that only FI's should be allowed to do 'checkouts' for all the reasons others have stated before, unfortunately I don't think that it is 'illegal' for a non-FI to do these 'checks.'
I have often wondered about the legality of companies giving Demo's of their 'planes. I never realised that they charged and I assume that this is beyond the pail. Charging for a demo? If my local car dealerships started doing that, then they would never get anybody through their doors!