Surely if this were the case the legislation would say the "the safety pilot must be legally capable of flying the aircraft .. .. .."
No because that would limit the scope of "assisting".
What about map reading, navigation, radio etc etc etc
Legally if you do not hold a current IR or IMC then you are not in any way capable of flying an aircraft in IMC. That is the legal position. The ANO deals with the legal aspects only.
Thus since it is impossible to predict in advance what assistance would be required, it is reasonable to expect that the safety pilot would be able to assist in every way during the whole period of the simulated instrument flight.
If whipping the hood off was an option then there would not be a need for dual controls. Safety pilot shouts hood off, recover or avoiding action turjn rignt descendand you do that........not realistic even in VMC.
Regards,
DFC