Hello!
The problem with a 1000ft+ treshold for instructors is that students never get a chance to see for real what IMC flying is about, and when it happens for real they will be on their own without an instructor in the right hand seat.
Yes and no. That's one of the reasons why many FTOs use procedure trainers for initial IFR training. The realism of a modern training device of FNPT II standard (or better) is good enough to give the student a very realistic view of CAT 1 minima. If he wants to see those in real life, I'm happy to show him. But only in a twin. Thirty-something Euros per flying hour (or whatever the current rate for in IFR instructor may be elsewhere) is simply not enough to risk ones neck (neither would be 100 or 1000).
And then, as an instructor, if have two important obligations: One to bring myself back to my family in one piece every day and second (and even more important) to bring my student home to his family after the flight. (Piston) engines do fail from time to time. If you fly a lot (instructors do), then it is a pure matter of statistics that you will experience such failures. I have had three so far. Luckily in twins, because two were in IMC with low ceilings. Therefore, I do not take any furher chances, if there is a safe option: A simple "no"!