As I said, it's not up to the CAA. The CAA could allow you to fly anything in UK airspace. You can now buy a lightweight plane (I use the term loosely) and fly it in the UK, no problem.
But you need a permit to go abroad. The time to get this varies, according to my information. Think of it as having to do the Special Branch for Jersey/Ireland/IOM notification but instead of 12hrs, having to apply anything up to 1 month in advance. It's a bit like a little project of mine: popping across from Crete to Libya; reckon on a few months to get it sorted (I gave up).
To some, this is OK, and of course if you never go abroad (sadly true for the vast majority of UK PPLs) it's also OK. There are also a lot of retired people in GA and they tend to have plenty of time on their hands. Otherwise, a sub-ICAO aircraft is completely useless.
And for JAA to agree to some kind of pan European scheme would take years.
Now, EASA have taken over certification from JAA and they appear sympathetic to the issues. However, they are under-staffed and are (AIUI) subcontracting a lot of the work back to the national CAAs - this is a bit like getting a convicted shoplifter to manage your shop because you haven't got the time to run it. I guess that in a few years' time this will change... then we might have a pan-European entitlement to fly the lightweight types, and that would do most people because European geography is relatively contained. Not many pilots fly to Africa, or Russia, or the Middle East.
I don't think DFC works for the CAA but the CAA is irrelevant now, other than a delaying mechanism.
As to lightweight planes flying IFR around Europe - I don't think people appreciate the kind of mission capability that is required. I know every pilot reckons his plane is the real entry level for proper flying
but look at this: the bases of Eurocontrol routes are about 7k ft. The 0C level in N Europe tends to be ~ 10k much of the year. The terrain of course varies, from zero to 10-15k ft. Cloud tops (stratus) tend to be 8k-16k. To do this properly you need a plane which can climb to 18k feet, possibly collecting a bit of ice on the way up. Most permit types can't do that. Many don't even have a half working heater. You also need the equipment to navigate and communicate, fly absolutely any published instrument approach (details given to you with 40 miles to run). Oxygen, naturally. You also need an IR............. there is close to zero chance of anything significantly changing on that one in the next few years.
One could build a fantastic non-CofA plane which would run circles around most current IFR tourers but marketing issues ensure that non-CofA types are lacking in some essential departments, to keep them cheap while good enough for VFR. AERO 2007 had hangars full of these things and they are great fun for VFR (and drilling unofficial holes in clouds when necessary) but won't hack it for long legs at FL160.
So there is more to this than first appears.
The actual flying in airways is a piece of cake. There is a great void below ~ FL290 in which there is practically no traffic, but you need to be able to get up above the tops, say FL160, in the first place.
It's also no place for engines which, according to many, fail every few hundred hours. That is complete unacceptable. Rotax engines are much better now but US schools have been chucking Rotax engines planes as fast as they can get rid of them, due to constant failures.
As regards flying IMC in the UK, you can do it right now, in anything. It may be illegal but you will not get caught if doing it enroute. I think the "could not care less" attitude to what people do in Class G is largely accepted by the CAA, but the downside of this is that they don't feel any pressure to do anything official.