I'd say that any kind of physical contact, except accidental, is out of line.
There are many non-contact ways to break the ice and show that you're not a hard bastard; all of us have been learners, and if you think back to those days it's not so hard to empathise with your student.
Just a few honest, sympathetic words person-to-person rather than ******-to-scumbag style is all that's required.
Touching is all too easily misinterpreted; if you want to try it on with your student, leave it for the bar afterwards.
To demonstrate control movements, in the case of a shared throttle or whatever, let them use the normal hand position, and you (using your above average skill and dexterity!) use the base of the lever.
It's just not appropriate, you are professionals.
(I can't believe this auto-censoring - the asterisked word above was s k y g o d - what the ****'s wrong with that?)
[ 15 August 2001: Message edited by: Arm out the window ]