Is it not common practice for the instructor and the student to discuss the flight either beforehand or at the start of the flight what exercises are to be covered and what if any emergency drills (may) be carried out.
This would seem particularly important if it's not your regular student/instructor relationship.
Yes I get that once you have your license you need to be able to identify problems quickly and go into auto on your own (and quickly in a 22) but it does seem form the initial account that some of the panic (probably the wrong word but you get the idea) was caused by the student's lack of expectation of needing to do an auto or low rotor RPM recovery.
For my non-instructor two-pennyworth initiating an auto/low rotor RPM recovery at 300ft with someone you haven't flown with much does seem to be getting a bit close to the line. Was it also over a built up area?
IFRESH21 - Interested to know if that conversation did take place beforehand ??
CC