That was later, and RFC/ RAF aircrew were not thus issued.
Unanswered question in my mind: what about the German aircrew?

I believe the Germans got them late in the war. The Americans didn’t get them nor the British.

Absent Parachute | World War I Centenary“Arthur Gould Lee, a pilot during the First World War, makes his feelings very clear. The supply of parachutes would not only ensure that ‘every pilot would sacrifice a little performance to have a chance to escape from break-ups and flamers’ but would also be a ‘great boost for morale’ (1969: 57). The reality of not having a parachute was described by Gould Lee: ‘What a way to die, to be sizzled alive or to jump and fall thousands of feet. I wonder if you are conscious all the way down? I’d much prefer a bullet through the head and have done with it’ (ibid: 93).

Pilots dreaded dying in a flaming airplane and pilot, Mick Mannock, after witnessing one of his victims going down in flames, wrote in his diary: ‘It was a horrible sight and made me feel sick’ (Jones 1937: 149). Mannock was known to carry his service revolver with him whilst flying as he would prefer to shoot himself rather than die in a flaming airplane. Mick Mannock died in a flaming airplane on 20 July 1917 although it is not known whether he managed to shoot himself. (See http://www.iwm.org.uk/collections/item/object/205125198 for photo of Edward ‘Mick’ Mannock.)

Gould Lee describes how a friend of his died in a plane whose wings suddenly folded back, one after the other, causing the plane to dive vertically:

3 January 1918 ‘They could see him struggling to get clear of his harness, then half standing up. They said it was horrible to watch him trying to decide whether to jump. He didn’t and the machine and he were smashed to nothingness. … God imagine his last moments, seeing the ground rush up at him, knowing he was a dead man, unable to move, unable to do anything but wait for it. A parachute could have saved him, there’s no doubt about that. What the hell is wrong with those callous dolts at home that they won’t give them to us?’ (Gould Lee 1969: 293).”

The observation made by ‘lucky rat’ was about RFC pilots and their jumping out of aircraft. But yes, leaving damaged balloons by parachute was in use during WW 1.

There is online a summary of military aircraft crashes from the year 'dot'... thankfully a rare occurrence these days. However back in the early days of aviation (1910s etc), the number of crashes was truly horrendous - almost all fatal of course. Really quite chilling, knowing your chances of survival were quite slim - and that's not including the '20 minuters'...

Two things that need to be considered regarding WW1 parachutes. Size and weight. WW1 aircraft were small and underpowered, and every ounce of weight was important. Early parachutes were large and heavy. What was needed was a small, dedicated aircraft chute.
An observation balloon had more space for the larger type of chute and weight was not important.

Also, the parachutes used by balloon observers were tethered to the balloon so opened automatically when the observer jumped.

Sounds very much like an urban legend. A very close friend of mine trained to be a Mig-21 pilot in the Hungarian AF in the late seventies (spent two years at the type school in Krasnoyarsk, was dismissed with a medical a few weeks before graduation), they were drilled to eject at the first sign of engine failure (an unpowered -21 has the aerodynamics of a handle-less axe head...) and never attempt to get it on ground.

No urban legend.

The onus of proof appears to be on you.

I have grave doubts, including that an ejected, surviving pilot has a story to tell that might save subsequent aircraft and aircrew.
Who in their right mind would legislate against that?

As mentioned above I cannot share details but the information is no urban legend. You are free to not believe it. It's neither Cosmic Top Secret nor breaking news but Cold War history so quite a few more people might know about it.

There is info that post Iranian revolution, some Iranian pilots were forced to fly with disabled ejection seats in the war with Iraq.

Read BRIXMIS by Tony Geraghty. There's a section in there about the recovery of the radar from a Yak-28 'Firebar' that crashed into a West Berlin lake that was in the British sector. The pilot had been refused permission to eject after realising he was in trouble.