In the link I posted are references to two FAA Chief Counsel rulings on the “JAA/EASA” angle.
You cannot get any more clear than this.
Anything else is wishful thinking.
Incidentally, does anyone know of a case in which the FAA has tried to take enforcement action against a foreign pilot over the heads of his local CAA?
The problem with that is the old favourite of mine: “I’ve been robbing banks for 20 years, never had any problems, just make sure you always wear a balaclava and don’t park your Merc outside the bank. It works great, there is no income tax, so I can’t see why everybody can’t do it” 
The other thing is that if somebody gets busted, or doesn’t get an insurance payout, he won’t be advertising it…
So much stuff written on forums (including sometimes this one too) is in that category. It depends on one’s attitude to risk, and whether the insurance loss adjuster who happens to be assigned to your case has more than 2 braincells.
Some people are happy to take a risk but what most of them won’t tell you is that they also take measures to keep a low profile. I’ve been told 1st hand stories of planes which “never existed”, sitting in hangars and flying fairly rarely. One G-reg and one N-reg, both UK based. And I am damn sure I know of others who won’t get busted but won’t get their next insurance payout, either. Then of course there was Graham Hill’s Aztec which also “didn’t exist” for a number of years before he crashed it, though the reasons were IMHO not his conscious action (IMHO somebody screwed up, and it’s a fact that his insurer didn’t pay out on the passenger liability). So you can do a lot so long as you keep a low profile, don’t crash, and don’t make big enemies on pilot forums 
Regarding your Q: In theory, AIUI, ICAO requires each Contracting State to pursue a citizen of that State for transgressions committed in another State. In practice, this doesn’t happen much, not least because it can be damn complicated. Also the offence has to be a crime in the State of citizenship, which limits it to the most basic stuff for which the evidence has to be blindingly obvious. I do know a bit about this because in 2003 I busted a French power station TRA… (details posted here).
IMHO the FAA will cancel your license if they have clear evidence that you have an invalid medical and are flying as PIC, but how will they find out? They will find out at your next medical (I don’t think any UK or US AME has any duty of confidentiality to you) unless you set out to conceal whatever it is for ever (which probably won’t work). As regards you flying, if your FAA papers are no good for a particular flight then you are probably not exercising their privileges anyway Incidentally your UK CAA license is invalid if you just go on the Pill without AME approval (ref: MED.A.020 (b) (2)).
The local CAA will bust you if you do something very illegal and they find out, and it won’t matter whether a foreign license was a part of it.
If you do a google on e.g. CAA prosecutions, or look here you get the flavour of the sort of things which get people busted, and it isn’t what most expect. The CAAs bust illegal AOC ops mainly, and high visibility CAS busts.
Thanks Colm,
That’s the nub of it, although the issue is probably compliance with Part II TFEU (non discrimination and citizenship) rather than Part III. Those provisions would apply to any underwriter just as they would to any CAA seeking to take enforcement action for crossing an internal EU FIR boundary with only an EASA licence.
And Peter, this may be off topic, but my understanding of MED.A.020 is that the requirement to consult one’s AME arises only if one has doubts about medication etc.
This concept of “EU law overrrides ICAO” has been well discussed in various places and AFAIK has never been legally tested; not even to the point of somebody spending money on serious legal advice.
One of the most obvious scenarios is EASA FCL banning FAA CPL holders (who don’t hold an EASA CPL) exercising the privileges of their FAA CPLs if the “operator” is EU based. This is supposedly illegal in the EU because it interferes with the pilot’s right to earn a living which is supposedly enshrined in some EU law. This impacts hundreds (if not more) of MET and bizjet pilots around Europe. Well, I hold an FAA CPL too so I should be interested in this… it is possible that EASA got legal advice and found this to be a real concern and this could be another reason why EASA FCL is being delayed over and over until there is the FAA treaty. But nobody has tried a big challenge.
Another area is aviation medicals, which contain absolutely massive areas which blatently contravene the EU disability protection, especially for CPLs/ATPLs. I don’t think the airline business has an explicit exemption (like e.g. the military AFAIK has e.g. they are not required to employ women in some roles). I am damn sure the CAA medical departments are hoping nobody throws big money at a test case. When Pape did a challenge in Australia he won, but his victory was hollow because (rumour) they limited his ATPL to AU airspace. There have been cases where somebody got treated not IAW the regs by the UK CAA and came back with a lawyer and got it, but AFAIK all these have been very individual cases which got settled quietly so as to not create a precedent. The UK CAA especially hates creating precedents so they settle even big illegal-AOC stuff on the court steps. So nobody has done anything really big in this area.
Re MED A 20 I don’t agree re UK but do agree re the FAA. The medication has to be one of the approved ones, obviously.
Peter,
Re MED.A.020, there does seem to be a difference between the Commission Regulation and the Acceptable Means of Compliance, which seems less dogmatic:
AMC1 MED.A.020 Decrease in medical fitness
If in any doubt about their fitness to fly, use of medication or treatment:
(a) holders of class 1 or class 2 medical certificates should seek the advice of an AeMC or AME;
