The CAA has chosen to permit valid SEP rating holders to fly microlights subject to certain conditions.
No, the CAA considered that there is nothing in JAR-FCL to prohibit a pilot with a SEP rating from flying a SEP aeroplane below 450 Kgs no matter what else you decide to call it. Taking a permit aircraft into another country is a different issue.
The only reason for the statement in JAR-FCL 1.005 is because some States still do not regulate microlights and the JAA did not consider it acceptable to claim hours on devices that were unregulated.