Dan,
I'm glad that your railroad is so conscious of the Hours of Service Law. Be advised, however that after 11 hours 59 minutes, the mandatory rest period is increased from 8 to 10 hours.
I've been around a lot of short lines. They are all usually very observant of Hours of Service. However, after the 12 hours or how ever long on duty you are not covered by HOS as long as you are not performing in Train or Engine service. I also know that it is Standard for most short lines, especailly undermanned ones (or ones where you are "cross-trained") to have you work beyond the 12 hours as long as you are not performing that service if the conditions require.
As far as the FRA regs go, the boilers on the 12 and 9 are covered by the Colorado Boiler Inspectors, and not the FRA. If the FRA were covering them then they would need to be ultrasounded and mapped and a metallurgical analysis done before they would be OK'd for service. This particularly applies to the 9 since the boiler was rolled in 1912. The new Form 4 regs are quite specific as to what needs to be done.
The difference between the Mount Hood and the Loop is that the Mount Hood Railroad is a common carrier. It connects with other railroads and can receive interchange.
Do you know why the FRA man was so adamant about the switch? It's because a derailment which killed a crew was cause by an unguarded switch which was thrown in front of a Main Line in dark territory. It was compounded when a short-crewed train (Conductor and Engineer only) left the entering switch to a siding, where they had tied down their train, open. A following train crashed into the rear end of their train and were killed. FRA Emergency Order 24 requires that when main line switches are returned to the main line position that the dispatcher be notified and that the Conductor and Engineer sign a log kept by the conductor stating that the switch was returned to normal. This only applies in Dark (non-signalled) territory.
Fortunately, most tourist operations rarely operate more than one train on a regular basis unless they are part of a short line or regional freight hauler. The C&TS is an exception as the D&S.
Rick