The way I understand it you can excersise your FAA priviliges, depending on your license of course, in Europe as long as you fly a N-registered aircraft. Anyone know if this is correct?
This is correct and you need to be current etc (BFR, Medical, SFAR73 if R22/R44, etc)
Most of the ones I see seem to be on private hands, is there no restrictions on owning a N-registered helicopter in Europe and flying it on a FAA PPL-H?
There is no "restrictions", but if the machine is based overseas (ie. not in the USA) then there are certain regulations. It needs to be registered to a US citizen, or you need to find somebody to open a trustee corporation for you that is controlled by a US citizen (you'll typically hold a share/be a member of that corporation and it costs you a certain amount per year). The helicopter still has to be imported to Europe and you will have to pay the import duties/taxes. You'll need an inexpensive FCC radio operators license too.
The trustee will normally take care of paperwork for you, and ask you to confirm your credit number on a regular basis ;-)