...yeah. That one. The one that was "the next big thing" while I was working on my instructor ratings.
The history is actually kinda interesting.
The language tgrayson quoted is from the defunct FAA Order 8700.1 (General Aviation Operations Inspector's Handbook). That doesn't mean it's not still valid - it is. Order 8700.1 was pulled and replaced with 8900.1 (Flight Standards Information Management System (FSIMS)) about 2 years ago. It contains pretty much the same language:
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Single- and/or Multiengine Ratings. According to part 61, flight instructors who hold an “INSTRUMENT-AIRPLANE” rating only on their flight instructor certificate are authorized to give instrument flight instruction in single- and/or multiengine airplanes for instrument certification, provided they hold single- and/or multiengine ratings on their pilot certificate. FAA Order 8900.1, Vol 5, Chapter 2, Sec 11, Para 5-503(A)
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Now, while all this was going on, there was a dispute brewing between Flight Standards and the FAA counsel's office.
John Lynch's PArt 61 FAQ echoed the 8700.1 language, but didn't quote it.
The Eastern Regional Counsel's office issued a written opinion saying the exact opposite - that to teach anything (including instruments) in an aircraft, the CFI must have the appropriate =aircraft= rating on =both= the pilot and the CFI certificate.
The FAA lawyers went so far as to charge a California CFII with a violation because the CFII, who had a commercial single and multi but only a CFI- ASE and IA, taught instruments in a multi. Those charges were eventually dropped.
I'm thinking that the noises about change are an outgrowth of the dispute between those two positions.
But until a change takes place (assuming it ever does), the rule is pretty simple: So long as the CFI has a commercial certificate with the appropriate aircraft rating, a CFI with only an "instrument airplane" rating, but no "airplane" rating is permitted to provide instrument training in an airplane, so long as he doesn't actually teach the student how to fly the airplane.