No, you are not alone. This is a terrible idea. It sounds as if it is a MOL scheme.
And to think years ago I thought nobody could hold their pilots in as low esteem and with as dodgy contracts as Niki! Shows you things can always sink lower.
The insurers are one point, however, there is an easy way around the regulator issue. Simply register your aircraft in ireland, they do not take any look as long as the paperwork seems halfway legit and the money keeps rolling in.
Somebody really needs to take a closer look at that cesspit.