The way I see it is that its really not much different to when two pilots go for a fly together. You need to brief beforehand on who is in control, and if you plan on swapping mid flight or at the completion of a sector then work out the semantics of it on the ground before you go. With an FAA instructor on board its not a lot different. They were under no illusion that I was logging P1 for JAA cos at the end of the day I wouldn't be hour building if I wasn't getting P1 time. If you brief who is in control and make this clear enough before you go then it is their issue to explain to Mr FAA how they gave some instruction to a JAA qualified PPL/IMC licence holder. I never checked their logbooks nor couldn't give a toss if they logged the time. I would hazard a guess that some would have thrown in a few hours here and there and others would have just enjoyed getting to a nice place for lunch and seeing the back of the FTO for a few hours.
As for busting airspace or heaven forbid crashing well fortunately I am here to tell the tale but I would hazard a guess that the lawyers will find me culpable. Afterall who did the planning, got the weather, put fuel in the plane, spoke to ATC, flew the plane and would have busted the airspace. The FAA instructor would argue till he was blue in the face that he didn't instruct me as he never would have shown any interest in any of the stuff I just mentioned. Like I say it was purely a taxi service. I wouldn't even know where to start with the FAR's nor wish to learn.
I can see that it can be construed as a bit of a grey area but there is enough evidence for me to sleep easy knowing all my P1 hours are valid.