This is the bit that I have some questions regarding as I've only ever seen the on the knees version of this skills. Do you teach students to do the roman handshake to keep them locked to each other or would the OOA diver holding onto the hose instead be better because then each diver can have some control over their own bouyancy?
In my own personal diving and in my technical instruction, I use a long hose and bungeed alternate, and I do indeed have the OOA diver hold the hose. I explain that preference to my students, but I have to have them use the standard octo arrangement in our instruction. It is a shop policy that makes sense because the overwhelming majority of the students will be going on vacations after certification and using that kind of gear. It is critical that the OOA diver does not lose the octo after the exchange. I learned that when I was doing a lights out, OOA exit in my cave training. I had to let go of the hose to find the line when we turned a corner, and as I turned the corner, the regulator came out of my mouth. Having no regulator in an absolutely dark situation is uncomfortable.
So, yes, I do have the divers hold on to one another firmly for that reason. If they are ever in a situation in which they need to be independent of one another, they should be aware of that before the dive, and they should not be using that gear assembly.
Also for the skills that involve taking the reg out of the mouth, I've been taught that PADI requires constantly blowing small bubbles out of the mouth as a critical component of those skills, to prevent breath holding. How well does that go with doing mid-water skills since you obviously lose buoyancy while doing so?
As NetDoc said, everyone requires that, not just PADI, and as he also said, that little stream of bubbles does not affect buoyancy enough to be an issue.
To illustrate, when I did my instructor examination, all of the candidates had to do a horizontal CESA starting in 4 feet of water and going 30 feet to a depth of 2.5 feet of water. After 30 seconds of blowing bubbles as we swam, we all just scraped our knees on the bottom and got a point taken off our scores for losing buoyancy control.