Thanks Luke for this interesting account.
I find myself quite worried by what you describe.
First of all the idea that a PhD is whatever a community of scholars will accept begs the question of what is this community. In fact the PhD is not a malleable concept like "Art" or "Health" or even "Research". It is an institutional construct where parity with international frameworks is of the essence and the credibility of institutions relies on their efforts to secure an acceptable level of parity. However that framework itself is based on some valuable ideas of what Universities and researchers are for, it's not just a bunch of thought police, there is a genuine and worthwhile enterprise at work.
"A 'PhD by Project' consists of creating artefacts and writing a short supporting exegesis"
This is rather like saying "A PhD consists of doing research and writing a thesis" It means absolutely nothing.
The examiners' questions you describe, seem to go nowhere near the point of a PhD, for example the question about other practitioners whose work is similar to or different from the candidate's own practice. One of the possible purposes of a PhD project with a strong focus on practice might be that it advances the state of the art (any art - dentistry, law, weaving...) in some way. In such a case we might wish to understand the state of practice but the focus has to be not on similarity or difference but on how the present practice (in the PhD project) has demonstrated or generated a meaningful shift in our understanding of the art in question.
In the case I described in my last message that shift is quite easy to observe. The researcher took an "art" of scientific illustration which might be seen as descriptive and showed how it could develop to become more analytical and a tool for reconstruction and identification.
But the most important issue is that the candidate must make an explicit claim for what they have done. It's not enough for the rest of us to see something significant in your work, you must be able to lay claim yourself. If a thesis is an argument then it requires construction, whether the elements of that construction include 40,000 words, 40 pictures, a collection of copper kettles or a musical entertainment is less important than whether serious scholars who understand the wider context of research as well as your particular field can understand your argument and agree that it demonstrates method, knowledge and contribution appropriate to a Doctorate.
best wishes from Sheffield