DRS, one can do VMC/VFR practice instrument approaches in Oregon.
Examples would be MMV or CVO. Done them myself, although sometimes IFR plan for radio practice etc. VFR flying shooting ILS does indeed reduce ATC workload and improve efficiency of flight training. I very much doubt PDX would entertain practice approaches flying VFR, nor would probably HIO, with plenty of VFR traffic or S/I approaches of bizjets for 31.
Yeah, SSR, FAA can be anal regarding responsibility/blame when more than one rated/qualified pilot is present. Example would be stories/cases of instructors being passengers and blamed for incident/accident when they weren't the appointed/agreed PIC, but by the virtue of being more experienced and CFI ticket holder.
In the case of being busted/fired/suspended for napping in the back, like your MU2 pilot friend, uff. That's tad more than just 2-6 seater light aircraft with pilots sitting in front. I guess if he had some sort of declaration/disclaimer in writing and witnessed/signed by ground staff. But hey, who'd have thought, right? CYA, as they say.