Engine failure at Vmca potential killer..its the risk we take...be it small for the greater safety in other areas.
For instance what would happen if one engine failed during power on stall practise...doesn't bare thinking about..but we continue to do power on stalls, even if we recover at stall warn/buffet.
Vmca demonstration practise is useful so that student can apprieciate the rudder loads and technique required to control aircraft at the critical phase between Vmca and blue line, which we practise at altitude.
Hopefully in real situation the student may be able to land ahead and not cartwheel the aircraft across the airfield.
Does any student remember much after training for any emergency, its up to instructors to be inventive on checkouts and go through emergencies rather than just swan about the sky.
Get student/pilot to state the emergency actions before takeoff.
As for engine failure on runways, i've always pulled the mixture, let the aircraft get a bit of forward speed, its easier to keep straight.