Cyclic Flare,
It would depend a bit on what was being flown, but there would be no arms folded!. There are 2 drawbacks to doing flight tests, especially initial licence issue PPL(H):
under JAR an examiner is not supposed to have flown with the pilot before so he/she is an unknown to you (and you to him/her);
almost without exception and no matter how it is approached the pilot being tested is stressed up and can be full of surprises!
Without departing into a discussion of types, lets say that certain types have less margin for error than others. I would also vary what I did a bit, depending upon how the rest of the flight had gone.
Any doubts though, and I would take it or, at least sort out the bottom end. There is always the option to try again.
I do agree that what it is reasonable to expect of an ab-initio PPL(H) is less than a more experienced pilot. In my mind, I feel that what I wanted was for the pilot to be able to show that they could fly the thing to the ground to the flare etc. in such a way that whatever then happened, there was a high probability that all occupants would survive.