A lot of these FAA pilots, like me, held / hold the JAA certificate before the FAA. In other-words I have standalone FAA certs, as well as standalone JAA certs and medicals. If this N reg thing really happens, there won't be any UK flight school getting any money out of me as I have nothing to convert. I have also learned the new trick of using CRI's to revalidate my JAA certificate, who don't charge, fly because they enjoy flying, and are very happy to fly in my aeroplane.
But more to the point, if N reg is a threat to UK flight schools, why don't they expand their business to offer N reg training? It is far easier to do this than one might imagine and there are plenty of instructors around. All these FTOs with expensive FPNT IIs can easily get them FAA approved to conduct FAA instrument training / IR re-validations (without even stepping into an aeroplane) - in fact many might already be approved for FAA use. This costs them nothing / very little, yet gives them to opportunity to offer a service that is clearly wanted.