Yes, many countries have rules saying it's not allowed.
This comes up on other Hypermiling forums quite a lot. One of the simple questions is, how does a policeman know that you are coasting in Neutral?
The other thing is a lot of these rules were written when the brakes on cars were pretty useless and engine braking played a much bigger part in safety.
Given that one of the other Hypermiling rules is to Anticipate and Plan Ahead, the use of Neutral coasting is ok in my book.
I plan ahead, I know that the handling changes when in Neutral, I use this information to judge when it is safe to use Neutral coasting. It's not really any different from any other of the many decisions you need to make whilst driving to ensure everyone in your car and other road users are safe.
Lots of things are illigal, doesn't stop people doing them. And to be honest, I consider things like robbery, rape or murder far worse a crime than pressing the clutch in every now and then on a hill (which technally speaking, you do thousands of times anyway every journey)
Perhaps unsurprisingly this car seems to be best at around 50 MPH following slow moving traffic, accelerating steady and slowly and easing off when the traffic slows (I think we had a lost tourist!) Yesterday on a 16.5 mile trip I managed to get 95.9 MPG. Such a shame I can't average this forever!