I think there are two separate topics:
1) Does the UK CAA have any jurisdiction over an N-reg a/c flown by an FAA-lic pilot?
On what grounds could the UK CAA prevent/sanction a flight in their airspace, that the FAA would deem perfelctly legal?
2) What exactly does the "limitations of underlying license" regualtion of the §61.75 lic rule pertain to?
Just the real intrinsic license limitations, like corrective glasses, co-pilot only, no night VFR, or does it include the various, time limited foreign type/class/weight/pax "ratings" as well?
Personally I think
ad 1) the UK CAA
cannot interfere with what FAA allows their pilots to do with n-reg a/c, even in UK arispace.
ad 2) but the FAA does explain what § 61.75(e)(3) means:
Make and Model or No Passenger Limit.
Some foreign CAAs (e.g., New Zealand and Australia) issue PPLs that limit the pilot to a specific make and model of aircraft or limit the pilot from carrying any passengers. Those persons must also comply with the make and model aircraft and passenger carrying restriction of their foreign pilot licenses when exercising the privileges of a § 61.75 U.S. pilot certificate (refer to § 61.75(e)(3)).
http://fsims.faa.gov/wdocs/8900.1/v0...02_014rev1.htm
thus: the FAA indeed
does mean "all the weird foreign rules that enhance or limit the rights of the pilot, as if he were flying at home", even if we might have a hard time finding out what he is entiteld to do back home.
So aforementioned flight would be illegal according to FAA views, regardless of the airspace it was conducted, meaning not even in US airspace would that flight have been legal.