I think you summarise the risk balance well. How high is high enough though?
Frank says 5.
When I learned, we were all taught to hover at 3. Then Frank said 5 so I did 5. Then I taught for a while in an A model Enstrom so it was 4 inches
Seriously, I think it depends on the machine. I don't like being much higher than 5 in the R22 because you're getting into bend-the-skids territory if she quits. In the R44 10-12 doesn't worry me, but I still teach 5 feet (but we probably start a little higher with a brand new student and work our way down to 5!).
I've always heard you usually get a little warning when a piston engine is going to quit (except when you run it out of fuel). Do people agree? Do most piston engine mechanical failures happen with some preceding bad noises that would hint it's time to get it back to a lower altitude?
The only engine failure I've had was preceded by a good 30 seconds of banging before the broken connecting rod finally brought it all to a (blessed) stop.
Paul