Can I recommend everyone follows SAM 2M’s lead and reads the relevant AIC. The AIC Sam quotes has recently been superseded by AIC 24/2006, by the way. This document finally lays it all out in, I think, simple and unambiguous terms, and hopefully will lay these arguments to rest, at least in the UK.
http://www.ais.org.uk/aes/pubs/aip/pdf/aic/4P094.PDF (You need to register but it’s free).
A few quotes from the AIC:
2.1 The decision speed (V1) is the highest speed by which the pilot should have made the mental decision to reject the take-off in the event of a relevant failure. Safety margins, in the form of delay times or extra distance on either side of V1, are built into the accelerated-stop distances published in performance data issued in compliance with JAR-OPS 1 and the Air Navigation (General) Regulations.
2.1.1 Thus, considerations of pilot recognition of a failure and reaction in response to that recognition are allowed for.
However, V1must be respected as the latest speed by which a decision to stop must have been taken to assure a stopping capability within the distance available on a limiting runway.
2.2 The published accelerated-stop distance makes no allowance for a decision to stop from beyond V1. It follows, therefore, that such a late decision presumes a judgement that a failure, or combination of failures, has occurred such that getting airborne would pose a greater risk than overrunning the end of the runway. On anything close to a limiting runway, the overrun is liable to occur with the aeroplane still travelling at significant speed and to impose a significant risk to the aeroplane and its occupants.
2.3 Some margins are provided in the continued take-off performance in the event of a decision to continue the take-off with an engine failure below V1 but these could be eroded to such an extent that the aeroplane may not be able to lift off by the end of the runway and/or to clear obstacles once airborne. This is particularly so when using a 'wet' V1.