My own belief is that Art 21(3) does not underwrite any particular licence privilege. It simply establishes the acceptability of a UK-issued licence for commanding aircraft registered in other countries.
I think that's a fair interpretation, but not the only reasonable one.
Where we differ is that I find nothing in either the ANO or the FARs to suggest that the acceptance of this principle in some way waivers all other elements of Part 61.
That's really a wider issue of the right of a state to make extraterritorial law and attempt to apply it within the sovereign territory of another state. I suppose one way of testing that is to ask if the FAA has ever sought to prosecute someone, particularly a non-US national, for an act committed in relation to an N-reg aircraft abroad that was not related to the powers delegated to it by the law of the country within which the act was committed.
The issue of legality and enforcement does start to blur a little here. It's obviously worth making a distinction between what is
legal and what you
can get away with in the context of national law. But if US law happens to be drafted in a way that has extraterritorial effect, but the US is not interested in applying that law extraterritorially, is it really meaningful to say that a UK citizen in the UK is acting
illegally if that law is broken.
You would presumably acknowledge that the FAA see things in these terms. FAR 61.3(a) would be substantially redundant otherwise since the FAA believes that the omission of this clause would entirely remove the right of a CAA licence holder to fly an aircraft of N-registry in the UK. If we accept your interpretation of Article 21(3), 61.3(a) is entirely superfluous.
No I don't think it's superfluous, because it might not be intended to catch the UK case. It might be for those states without a provision like 21(3) where the national law simply says "in accordance with the law of the state of legislation". In that case, in the absence of 61.3(a), a local licence could not be used.
Here's a related issue. 21(3) requires a licence granted or rendered valid by the US for aerial work or public transport. Would 61.3(a) permit a UK CPL/ATPL to be used within the UK?
On your Article 8 point. Compliance with the FARs is an explicit condition on which the aircraft's certificate of Registration and Airworthiness remain valid.
I'm not really familiar with FAA C of A's. Is that condition part of a FAR or is it rubric on the face of a certificate?