Most P& days require insurance, tax and MOT, but all the ones I have been to, many of the cars were being trailered in, and were obviously not road legal, but they never stopped them, so I guess it is an insurance thing, which they say but ignore.
You are right, and it is something that is so nice about this forum, we have the "Nutters" who want to go to the extreme, and we can all learn from them, and then the ones who basically want a nice towcar, and the most it will do is cross a wet grassy field with out chewing it up.
I think as long as you drive to within the spec of your vehicle, it shouldn't be a problem what mods you make. The main thing is when you fit things that compromise the original road safety spec, and then continue to drive it, like it is a formula one racing car. If any Mod is actually dangerous, the MOT should pick up on that and fail it, otherwise, you still need to pass things like the stopping test, so you brakes and grip must be up to spec, just not significantly better, as it is with standard road tyres.
Lets face it, no off-road style of vehicle can ever be designed to go round bends at high sped, even with all the suspension enhancements in the world, there is still going to be a time when momentum and inertia over ride the available grip the tyres have on the surface they are travelling on. The only truly safe vehicles are low slung and very light weight things, that drive nowhere over 30MPH or travel on rails. We all know, you should drive sympathetically to the type of vehicle you are in, even when they are in the condition they drove out of the factory in, you can't corner a double decker bus, like you can a Ferrari. All cars are now built so they far exceed the basic safety specs, and instead of us being grateful for these extra benefits, we take them for granted and act like they are the "New" normal. For example, a good driver does not need anti-lock brakes, and can actually stop quicker than a car with anti-lock brakes, but there are now many people out there, who don't even know what cadence braking is, let alone how to do it, and NEED anti-lock brakes. Same goes for traction control, and syncromesh gears etc.
Modded off roaders need to be able to travel on the road, even for occasional things like the guys who volunteer to drive people in extreme weather etc. but also some services, like police, coast guard and Electricity board, use modded off roaders to carry out their day to day work on some of the more remote places.
Personally, I think the ethos of off roading is moving in the wrong direction, and has gone away from, the fun/skill of driving a car into a situation where you wonder if you will be able to get through it. It was not just about the cars abilities, there was a skill from the driver in picking the right route, and giving it just the right amount wellie, to get through with out loosing grip, pushing your own and the cars abilities, to see haw far you could get, but not pushing them so far that you could not stop before you were so badly stuck, you needed a Chinook helicopter to recover you. It's good practice that if the ruts are too deep, then go a different way, get out of the rut, or fill it in a bit.. Ultimately, just making the ruts deeper by making your car have better ground clearance, is a bad thing, as that is what has caused the Green lanes to all be shut. 12" deep ruts are bad for everyone.
If you want to modify a vehicle so that can really go anywhere, and want to modify it to that extreme, then you have to accept that it is no longer a road going vehicle, and is confined to only being used at events and Pay and Play days, but that kind of defeats the point, as you may as well just buy a tank, and know you will never get stuck.
The clever bit is knowing when you cross the line from Off-roadable car to Off the road only car.
I think that if you have the brains and brawn to be able to carry out the mods, then you should be sensible enough to realise the detrimental effects of your mod on the handling of the car, like you can't go round bends as fast, or stop as quick, so therefore know how to you have to adjust your driving with that in mind, e.g. going slower, and reading the road... after all, when you put in all the extra work to not only mod the car, but keep it road legal, I think generally you are more likely to drive it with more consideration, as you know that if you get into a shunt, the £500 winch on the front is toast, and/or the £200 bumper will need to be re-built, together with those nice and expensive shiny spot lamps. Most of which will be not actually be covered buy the insurance company, even though you have informed them. Also when it comes to getting home from having a play, it still needs to be drivable so even there, you drive with more consideration.