'A proper test with defined objectives and pass or fail' - that sounds to me rather like a revalidation proficiency check.
FIs give instruction, FEs test. Personally all I want an FI to do is to make sure that Mr-Whoever won't damage himself/others/my aeroplanes. He doesn't have to prove he's Chuck Yeager, just that he's safe enough. If he needs a bit of refresher work, then he should be grateful for that.
Mr-Whoever would have to be very dodgy indeed to make the FI consider him to be a safety hazard; if he didn't accept that judgement then he would merely prove himself to be an overconfident sonofabitch who shouldn't be entrusted with command of a bicycle, let alone an aeroplane!