To the best of my knowledge a CPL or higher is NOT required in order to instruct.
There is a requirement in JAR for the applicant to demonstrate a knowledge of CPL theory, which the CAA has taken as meaning he/she should pass the theory exam. The simple insertion of the word "relevant parts" in the appropriate JAR and for the knowledge to be assessed as part of the FI course rather than as a separate full CPL theory exam would be a great improvement. (of course you don't even need to do this for the NPPL because it's not a JAA license)
An exemption, similar to that which exists for Microlight Instructors would allow a PPL/FI to be remunerated.
I'm worried by the multiplicity of new stuff being proposed. The danger is that everything gets fragmented. The instructional skills required to teach someone to fly to PPL standard (whether it's PPL, PPL(M) or NPPL) are similar and don't justify a different rating.
Why are we inventing something new rather than fixing the problems with what we've got?
JAR have a simple and easily understood requirement, the instructor must hold a license at least equivalent to that for which the instruction is being given. If you simple extend that principle then and NPPL FI could only instruct to NPPL level and a PPL FI could instruct to NPPL or PPL level. If you fix the remuneration and CPL theory requirements what else is needed?