Prior to the October 2009 Part 61 amendments, the general view was that while technically ok to instruct and log PIC without the endorsements required to act as PIC (so long as the pilot was capable of and did act as PIC), it was generally a bad idea since, if nothing else, if something happened, answering the FAA's "What the heck made you think you were qualified to teach/evaluate/recover from errors made by that pilot" would be a lot of fun for others to watch. As I recall, there was even a blurb in the orphaned Part 61 FAQ that came down to "what, are you crazy? Of course you can't!"
The October 2009 amendment, among other things, made an interesting change to the logging of PIC by CFIs. It not at least requires that the CFI be "rated to act as pilot in command of that aircraft." Now whether or not that's simply the flip side of the change in 61.195 that requires that a CFI has appropriate aircraft ratings for any type of instruction or a signal of something more sinister in the works, I haven't a clue. "rated to act as pilot in command of that aircraft" is a very weird turn of phrase and I haven't looked at the Final Rule explanatory material for clues as to what it means.
But, without expressing any opinion at all on whether it's legal or not, FWIW, I'd stick with my personal rule about not teaching in something I'm not qualified to fly myself.