@JohnW2 makes a good point, which has been talked over many times, it is up to the person working on an installation to ensure it is safe, not up to the person before him to wire in a way the next person is unlikely to make errors. With some exceptions.
Borrowed neutral is the one that comes to mind, today with clamp-on meters it is easier to detect, but the neon screwdriver is your friend with borrowed neutrals.
If we accept a borrowed neutral is potentially dangerous, one has to consider if any other hard to detect fault is also in the potentially dangerous category. I seem to remember a spade connector with a boiler causing a problem, the spider earth tag had a load of earth wires on it, the plumber needed to remove the panel so disconnected them all, and after he reconnected them all, and turned on the boiler and used a insulation and low ohm meter to check continuity to earth pin of plug and insulation between earth and all live parts and it passed.
He was called back as the occupant had got a shock, he retested with same results, and then some one was injured, can't remember if a death or just hospital, but now HSE is involved, it seems there was a change over switch, with a green N/C contact, but he had tested with boiler turned on, so it was the N/O contact made when he tested, and he had put the green wire on the earth spider. Plus there was no earth to the socket it was all plugged into.
The tradesman was found guilty as it was said had he not been called back it was an understandable error, but since he had been called back, he should have done more tests.
This was a long time ago, and today the socket tester with loop would have found the missing earth so fast, there would be no excuse. However I felt there was also no excuse for using a green wire with a spade connector on the V3 micro switch.
As you have pointed out, and I have also pointed out, we are looking for potential dangerous not non compliance. So is using a green/yellow wire for a line connection potential dangerous, I would say yes, use it for a neutral and not so cut and dried, but using a green/yellow wire with a over mark which can easy fall off is an accident waiting to happen, so I would have no hesitation in awarding a C2.
However if some one else only awarded a C3 I would not say they were wrong, it is up to the inspector.
I remember working in Algeria with a Turkish/Dutch electrician, born in Turkey but worked and lived in the main in Holland, and he claimed neutral and earth were the same, and would swap between 4 and 5 core cables and use one core for both neutral and earth on the 4 core. He was above me in rank, so I could do nothing. However I can to a point see his reasoning, and to use a green/yellow cable for neutral would not result in any great danger.
However I know what I think, the whole idea was to see what the team thinks, maybe I should have done a pole.
1) Say nothing.
2) Point out not correct.
3) Say it needs rewiring with an extra core.
It is the same with other items, do you point out low voltage is 230 volt? or that an electronic transformer is a switched mode power supply, or MR16 means multifaceted reflector 16/8th inch across, or even L stands for line not live. I know what is and isn't dangerous, I have found out the hard way with a mauled hand to prove it, and I am dead against recycling, after my hand was recycled in a concrete recycling machine.
But it seems from replies people feel using a green/yellow wire for a line supply is not that bad, which is not what I expected.