Interesting thread.
Many years ago as a Flt . Lt. standards QFI at the jet refresher school at Manby I flew as a QFI with many senior and very senior officers (air rank +). I never had any problems whatsoever on this issue, and when on one of my last trips, I had to fail a Wg Cdr on his FHT (don't think that had happened before) my boss and the station commander backed me to the hilt, though they did ask me for a full and detailed trip debrief. Even the Wg Cdr later bought me a drink in the bar, he agreed with my decision !
Rank is irrelevant and any pilot of any rank, but particularly senior and VSOs should be well aware that the captain is nominated in the auth. sheets.
The captain IS always nominated before the flight and that remains so for the duration, except when as airline training captains, we were authorised by our company ops. manual , if neccesary, to assume command. Never did.