M-reg would not protect a straightforward private owner unless he actually lives on the IOM.
San Marino is a new registry which, like the IOM, accepts FAA certification and FCL, but I don't think this helps. I can't see they can issue JAR-FCL papers. Also they are pricey - 15k euros initial charge. But it does give you a Denmark-like VAT advantage, although at the 15k up front hit it is even more expensive than that Danish lawyer
However, all it will take is for one EU country to convert ICAO papers into its own, post-2012, and that will solve the problem. It will p1ss off EASA but whether anything happens will depend on what sanctions they can apply. Also they won't find out for a while. Ireland used to convert FAA ATPLs into Irish JAR-FCL ones, for (I am told) about 3 years before that was shut down.