Not above 500ft
Cyclically
Yes you will be in contravention of rule 5
You do not accept the clearance.
You certainly do not need to accept the clearance in a MATZ
Do not let yourself be talked into illegaly flying. You are the Pilot in command, not under command.
As an aside we have a dispensation to rule 5 (and a few others) but I never use it unless I need to.
If a young person gets tipped off a horse and gets paralysed(Ive been to one or two) and daddy has a few horses and a lot of money then he will screw you to the wall in a civil court if he thinks you are responsible.
Your feet wont touch the ground.
The CAA or anybody else do not have to become involved at all.
You will have to hire a lawyer.
Regards
P