On the basis of this discussion on insurance an EASA licence is itself illegal if used to fly throughout Europe
Yes but no one is saying that you have to replace your FAA certificate with an EASA certificate to fly an N Reg. You still have to hold your FAA Certificate and keep it valid so there is no relevance to discussing insurance.
The issue is around the fact that you will have to have an EASA licence that duplicates your FAA privileges in order to operate in EASA airspace in an N reg aircraft. In fact it is not restricted to the N reg it is an ICAO non EASA licence and aircraft.
So if we are going to debate the issue it needs to be around the actual facts rather than a tangent!
I don't agree with the dual licence requirements at all as I do not see a safety case for them in any shape or form and yet it is in the name of safety oversight that EASA or claiming they need this.