Just to give a view from a UK ATC perspective - and I stress it's my view because there is just as much confusion and differing opinions amongst controllers as there seems to be amongst pilots.
If a pilot asks for a practice approach I will clear him/her for an approach. I will provide standard separation between the 'practice' aircraft and all other IFR traffic. I will give traffic info on VFR traffic to the 'practice' aircraft - and traffic info on the 'practice' aircraft to other aircarft in the area. So the fact that it's a practice approach makes absolutely no difference to me - I treat it like a proper one! (For the record - the exception to this is practice Cat II/III approaches but I guess that's not really what we're talking about here)
I don't know whether this is right or wrong because I can't get my head around the law on this topic but it is safe. But like I said earlier, ask a different controller and there's every chance you'll get a different answer.
I would normally refer anyone to the guidance and procedures in the Manual of Air Traffic Services. But I don't think there's anything in it on this!