...the GFPT...It is also optional but most schools will make you do it because then they can milk a few more hours out of you.
I beg to differ. It's been a while but, without the CARs in front of me (and relying on memory), prior to passing a GFPT a student pilot can only fly 3 hours solo between dual flights. Post-GFPT this can be 15 hours. A school would milk more from their students if they didn't do a GFPT because more dual checks would be required.
Back to the 3 hour solo limit, a student pilot isn't going to get a very good solo navex in under 3 hours. Plus there are other requirements about distances and landings on solo navexs before sitting a PPL or CPL flight test (300nm from memory - unless you're cruising around in a Bonanza chances are this will take more than 3 hours). Some full-time courses do away with PPL flight test, which might be what you're refering to.
If this particular chap has flown from interstate, there is a good chance they'll be getting very close to their 15 hours. Bust the 15 hours and there could be a bit of trouble next CASA audit.
What the flying school has done is not illegal, but is a bit rude. I would never sign off a student with the expectation that someone I don't know from another airfield will sign the MR for them. My rule was pre-PPL - sorry mate, but you'll have to be back before end of daylight. Post-PPL - fill your boots, fly to Broome if you like (with the appropriate planning of course!).