The rules in this regard ( certainly inthe UK and many other countries) are clear cut and are not open to interpretation, or anything else. The Captain may have been well intentioned but that is simply irrelevant. In this case if they did as you suggest they were totally in the wrong and in violation of the rules.
My suggestion though would be that you apply whatever recourse you see as appropriate. It might be better to approach the individual discreetly and point out that these actions put you in an invidious position both with the other crew who are witness to these events and with the company and DfT whose policy and instruction is clear. Whatever may be everyones personal feelings on these matters ( and you may well be sympathetic), you yourself are liable to be disciplined for contributing to such infractions.
Although the Captains feathers may be a little ruffled by the approach, I think less so than a formal complaint through the management structure. If such an approach was ignored in the future then they would have little arguement with any subsequent action that almost certainly would result.
That would be my suggestion in this event, and an adult response. You are of course within your rights and ordinarilly required to report any safety or security concerns through the properly notified channels, so at the end of the day it is your call and responsibility rests on your shoulders for that decision.