Do you teach them to hold the regulator in the vics mouth? For your description it does not sound like it.
I do the unconscious stuff as well in AOW and rescue classes. OW no because that means I am not looking at my students since I don't have an assistant to watch them.
Yeah we dont hold the divers regs in, we teach our students not to purge the divers regulator or try to put it back in if it falls out since we figure that doing so could fire stuff down the divers throat. Also we figure since they are going to be constantly ascending to the surface the air in their lungs is going to be expanding which will give them a supply to keep the unconscious diver alive. Also it wouldn't be uncommon for a diver who has fallen unconscious to have stopped breathing for whatever reason so stuffing their reg back in could just end up wasting time.
It may help that we use a 15 meters/50 feet per minute ascent rate so from the max depth our basic qualification qualifies you to go to (30 meter/100 feet) it only takes us 2 minutes to get to the surface so even if you lose your reg with the air in your lungs expanding and you being unconsciousness so hardly using any oxygen they should easily be able to hold out for two minutes.
I dont think we have ever actually had a person lose their reg when they've fallen unconscious, we've found that if someone falls unconscious underwater their jaw remains closed so we find they naturally grip it. The large hoods we all wear for the cold water might help as well to hold it closed. Also we get in very close when we do lifts so that we can keep control so we are pretty much chest-to-chest, reg-to-reg, im not sure their reg would have space to come out!
One guy actually had a heart attack and fell unconscious underwater and when they hit the surface the guys jaw was seized shut so they couldn't get his reg out his mouth to give him mouth to mouth! We usually say to people that if a diver falls unconscious you are better getting them to the surface and onto land as quickly as is safely possible. So long as you get them to the surface somehow that's the main bit! One diver i know actually lifted a diver by sticking the unconscious divers head between his legs then grabbing the unconscious divers legs and lifting him upside-down!
I agree with you about having an assistant as well, we always say that if you are going to be teaching lifts it is pointless without another person there to act as the dummy since if you are being lifted by a student you cant really see whats going on as you say!
EDIT: Just found some footage i took of one of our trainees screwing up a rescue drill:
http://www.youtube.com/watch?v=RTW6pKxYSVI
if you skip to 1:25 you can see they make two main mistakes, they grab a side strap and don't pull the body in close enough so when they start going up the body starts to rotate away from them due to the drysuits bouyancy. That was only from about 7 meters as well if i recall. If had been deeper and it was a real rescue the body would have rotated round and ended up upside-own, then with the air migrating to the drysuit feet they would end up shooting up at a fair rate of knots