I'm not saying for a second that operating a Lightning wouldn't be extremely difficult and costly, and with the benefit of hindsight I doubt if anyone would have been able to afford it in any case, but to simply rule-out the concept (as the CAA have effectively done) is just ludicrous. Their supposed concerns with safety bear absolutely no relation to the actual risks involved. But then I think we're all familiar with the modern world of over-obession with safety; this is why air show display lines are slowly drifting into adjacent counties!
I understand your frustration with the nanny state 'health and safety' culture we are sliding into. Elvington's (cancelled) airshow is an example of public liability crippling the smaller airshows in the UK.
Regarding the origional point though.... The UK is densely populated, you can imagine what would happed if the worst was to occur. 'A fast jet in the hands of a civvie'. Its already going that way with the current JP's and Hunters flying about in private hands. Couple this with my understanding of the BAe situation as has been mentioned, the DA falls on them now. Im unsure of the technicalities this entails but i do know that a CAA permit would rely on their compliance, BAe saying not a chance.
Also worth considering the spares required (also maybe a requirement upon BAe?) are no longer produced. Some groups who ground run the lightnings now seem to say they would rather keep them running on the ground for longer than having them fly for a bit then being useless other than a motionless museum piece.
Perhaps someone might like to tell me if im talking bollox?
Edit: Whilst constructing this post 320psi has put it far better than me...