Well I decided to call and ask.
After an extreme wait over 2 days, I finally got a call back from a supervisor (since regular staff was as unsure as the rest of us).
I believe the gentleman's name was "Marion". Don't know if it was first or last, but since that was John Wayne's given name, it seems appropriate for a firearms guy
The short answer is NRA type instructors need to observe their students firing a gun. There is no qualification, round count, etc. but as actual law is written it should be done.
There is however, no one checking and no actual mechanism in place to make sure it's being followed. He's hoping (and suggesting) the Legislature, rulemakers, etc. clarify it.
The gist of it is that they want to make sure folks can actually shoot a gun if they need to.
Personally, I'd sure hate to see all the fine reciprocity go away because instructors want to dance around the issue.