He can fly a G-reg worldwide on any ICAO PPL (VFR noncommercial, etc) but this concession (in the UK ANO) is set to end in 2012.
Why exactly did he fail the JAA medical and pass the FAA one? There are not many conditions which can do that, and anyway there may be ways around it. For example (as I posted recently) the UK CAA is allowing initial medicals to be done on the renewal limits.