Hi Bookworm,
As you know, a SVFR clearance is only available in a Class D Zone in IMC or at night, and ATC are required to provide standard separation of 1000ft vertically or 3nm horizontally between SVFR flights, IFR flights, and SVFR and IFR flights. It is difficult enough to mix VFR and IFR in the City Zone on a fine day, with airspace constraints, base of the LTMA at 2400ft, the Specified Area, heliroute H4 etc., without having to apply standard separation between SVFR and IFR. This requirement would effectively close the Zone to non IFR movements, unless City Airport was closed or very quiet, so I am afraid that your suggestion, although solving the Rule 5 problem, would cause more problems than it would solve. And changing the type of clearance would have no impact on what would happen in the event of failure of a power unit anyway! With singles as you know, the transit route is via the Lea Valley which takes aircraft clear of the Specified Area (built up area of Central London for those not in the know). Although not ideal, there are some lesser populated areas at which a pilot might land if he lost a donk - Wanstead Flats, Hackney Marshes and even City Airport in an emergency - but don't use the PAPIs! Unfortunately there is no satisfactory solution to the problem which is caused purely by the geographical situation of the City Zone.