After landing the instructor asked me "did you read about the Coventry incident?"
Wasn't your instructor in any way ashamed by the fact that tower spotted the other guys before he did, wasn't he? From your posting here and the above comment, looks like there might have been a bit of "blame shifting" going on?
In any event, perfectly legal and acceptably safe. Incidentally, I would hazard microlight pilots as a group probably have more experience and recency than GA pilots as a group, given that their machines are cheaper to operate and ownership is far more common. Also, less instruments should mean more stick and rudder skills.