So which is it? Did the aircraft lose control because of the method in which the instructor simulated engine failure, or did the aircraft lose control because the student mis-identified which engine failed?
Apologies - not very well worded. Suggest a good read of the two ATSB Camden reports - both of which are indicated by links in the initial recent ATSB publication I referred to. Mis-identification can occur whichever simulated engine failure technique an instructor decides to use. The danger lies in the mixture cut at low level since not only has the instructor have to swiftly juggle a closed mixture and a closed throttle and then re-open the ` failed` engine but he also has to take over in case the student has made a major cock-up.
If the `failed` engine does not pick up when the mixture is moved from cut-off to rich then the situation becomes grim indeed as that engine is now dead and the prop windmilling. if you think the chances of that happening (engine not picking up) is just about zero in real life, then look at it this way. When training on single engine aircraft on practice engine failures on climb out after take off, why don't instructors cut the mixture control on those single engine types to `simulate` engine failure? After all the engine types are usually similar.
No instructor in his right mind would seriously consider cutting a mixture in a single engine trainer after take off. Well, why not? The answer is simply because the aircraft would be left with no power if the mixture was moved from cut-off to rich and nothing happened for whatever technical reason. Down goes the aircraft... Same principle applies to cutting the mixture on a twin and the engine may not always start when the mixture is moved back to rich. It is always a gamble.