Jaybird, one of the big issues involved is liability, especially for the DPE. Tort law does not follow the same rules as administrative law, and there s a jury involved as a wildcard. While the FAA respects their rules of establishing command with regards to administrative law, that does not shield one from professional responsibility and liability in civil court. A DPE or CFI will still be assigned the majority liability in the event of an accident for two reasons, they are the professional and are being paid, and they have higher levels of ratings and experience and are held to a higher standard.
At least the USCG has their rules lined up with what civil court will do, although sometimes it can cause a problem. As far as the USCG is concerned, who ever has the biggest license on the boat that isn't a paying passenger, is the person they are calling to the carpet first regardless who the company is listing as captain. In the event of equal license grade, default goes to the earliest issue date. I've never heard of them using it stupidly, and I got called to the carpet on a small ferry accident that I was a non rev pax on and in the wheelhouse where they indeed called me in first because I had the biggest ticket onboard. However it was all a non issue since the accident was the other boat being an idiot and the person driving the ferry did everything right, just wasn't enough room to miss.
The risks are manageable and Fed's aren't out to get anyone. As far as polite and bruised egos, this is aviation, there is little room for egos.