The rules under which we operate are not "cut-and-dried". The actual FAR's are only part of the equation...they have to be considered in context with FAA written interpretations (AC's, legal opinions), and common practice. You have to take it all in context and see the big picture.

"Common practice" can be a grey area too, and it's made harder by the fcat that various FAA staff and FSDO's may have different opinions on the same subject.

You have to be VERY careful trying to strictly interpret the written FARs. In criminal law, the law has to be written in an absolutely airtight manner, or the crook gets off on a technicality. In admin law the same standard does not seem to apply...the FAR's are quite "sloppy" in a legalistic sense.

As to the medical requirement for CFI...the FAA intentionally did not require a medical for a specific reason: They wanted to keep old, experienced pilots (who not be able to hold a medical) in the instruction loop to benefit from their years of experience. Not a bad idea, such a person can't to PPL training, but they can do a lot of other stuff where experience counts....IFR, IPC, BFI, or CFI training for example.