Michael wrote:
Fortunately I've never had a student who couldn't deal with either
method. I'm not sure what I would do then.

I think the answer needs to be "not sign them off for the checkride".
The ability to turn to and maintain a heading without a working DG is
an essential skill. Somehow you need to be able to do it.

Just turning until the little picture of the airplane is pointing in
the same direction as the purple line might just be a reasonable plan
with today's cockpits. Unfortunately, I'm not sure you would convince
an examiner of that.

Back when all our airplanes had ADF's in them, just setting the ADF to
a distant AM radio station made a decent DG replacement.