Some very interesting points being made here.
I believe that there is a definite advantage to be gained by teaching a student pilot how to fly the aircraft without external reference. Unfortunately, in most helicopters, and aeroplanes for that matter, you simply cannot get rid of all external references. No matter how well you restrict the student's field of view, there is always an external reference that will make the exercise unrealistic and inadequate.
The only way to improve the reality of the exercise is to get into the cloud and do it for real under IFR, or, do it in a quality simulator.
Both of these options create their own difficulties and would be quite difficult to achieve given that most PPL(H) training is now done on the R22/Schw 300. I am guessing, therefore, that the aviation authorities around the world are aware of this and have decided to accept a few hours of simulated IF as a compromise.
Personally, I prefer the "educate and supervise" approach. The student must be well aware that simulated IF is a poor compromise and is not a ticket to explore the sky nor to ignore reducing visibility/cloudbase. If all else fails they MUST land and phone their mum.
You woudn't catch me in cloud in a 22.