The whole is a murkey area
There is nothing "murkey" about N-reg. It is 100.0% legitimate. Probably 90% of the world's aviation is N-reg. One just needs to meet the additional legal requirements imposed by the UK ANO in situations where an instructor is being paid, etc - as usual, this is to protect restrictive / job protection practices in the UK. Every other country, more or less, plays the same game.
I think that Willowair URL is a pretty accurate summary.