Theoretically, all lights should work, but mine have never been tested, if the bike is Rec or Club Permit registered, then yes, TAC will cover you. I know that for a fact because they approved my claim for my accident on private property! There may be some sections of some vinduros where you might have to walk your bike along a short section of major road, but at the last couple of events, VERi have organized a 'Certificate of Approved Operations' (like we get for the HCR), which allows RecReg to be used in areas where it usually can't.
Lots of questions, Craig. You must be seriously keen! You can also contact someone from VERi if you want more info.