It makes clear sense that the CAA are only permitting G-reg aircraft in this trial. They (the CAA) have full control over these aircraft but have absolutely no controls over the FAA registered N-reg aircraft or the equipment carried therein or the certification of the pilots flying those aircraft.
That's complete nonsense.
An FAA pilot is required to be properly licensed and rated for the flight rules, airspace, etc, etc, just as the CAA pilot is.
In UK airspace the CAA has no more and no less control over a G-reg than they have over an N-reg. They can raid the plane and turn over the pilot in both cases, any time they feel like it.
The equipment carried has to comply with the requirements of the flight rules, the airspace, etc, and this is true for all aircraft registries and for all airspace.
All this stuff is international, and the national aviation authority (the CAA, in the UK) has inspection powers over planes and pilots that land there.
If somebody wants to be illegal, it's just as easy to be illegal in a G-reg as in an N-reg. Just stick some numbers on the side of the plane, and fly somewhere. You don't need a license. Same with cars - until something happens, or somebody spills the beans on you, nobody is likely to find out. And there are at least as many dodgy G-reg planes flying as there are N-reg ones; most N-reg ones are pilot owned and thus much better looked after. The bulk of the UK certified G-reg fleet is used for flight training and is maintained to what I would call minimal VFR standards. This, together with there being so few JAA IR holders, is why there are so few G-reg planes with TSO129 GPS installations; an IMCR holder doesn't need TSO129 for anything as any old handheld GPS will be 100% legal anywhere that he can legally go IFR. In fact it's far easier to be illegal in a G-reg because the moment you land your N-reg in France it is liable to be turned inside out, documents and licenses checked, etc, whereas the EU treaty prevents the French doing that with G-reg.
Use of N-reg aircraft in a trial outside the US would require FAA involvement.
Do you have a reference for that? I cannot see why. This is just some basic VMC flying, with a safety pilot to boot. The PIC has to be legal to be PIC in the relevant airspace (Class G in most or all current locations in question) which is a non-issue. For an N-reg in UK Class G you just need any ICAO PPL, and for the trial requirement an FAA IR would do fine.
I can fully understand why the CAA did this, but it's pure politics.