There's no argument that in Class D, ATC are NOT required to separate IFR from VFR, however, irrespective of airspace classification, ATC has a responsibility to provide a safe, orderly and expeditious flow of air traffic.
This can sometimes be achieved by requiring VFR flights to accept routes, vectors or not above/not below level restrictions etc....shock, horror, I've even done it in Class G!!!
I suspect from the original post that Crash and Burn's colleague had been in some sort of situation which had given ATC cause for concern but the ensuing conversation has left obviously not clarified the point.
Whilst it might be perfectly legal for a VFR flight to fly up the final approach track 'visual' with the IFR chappie barrelling down the ILS in the opposite direction, it's probably not the ideal situation that most pilots or ATCOs would want to find themselves in.
Being able to quote chapter and verse after the event to cover your @rse is no substitute for airmanship!!
Perhaps C & B would like to shed some more light on the original 'incident'??