I suspect that there are actually three different sets of rules that govern using a US license in UK, and they don't necessarily agree with each other. 1 is British law, 1 is international treaty and the other is motor vehicle department interpretation of British law.
International treaty between US and UK says that your US license will be honored in Britain. British law says that you have to get a British license one year after settlement and the motor vehicle department defines settlement as getting your FLR.
You could, as pointed out, drive on your US license and deal with buying cars, getting insurance and being stopped by cops indefinitely as they would be on international treaty. Somebody would have to get into an accident and take all these issues to court and let the lawyers argue it to find out for sure what would happen. I'm sure any decent lawyer would claim that you weren't actually settled in the UK because you still maintained a US license.
What the court would decide in such a case, I can't say. But the court is neither the MVD or the IO, and the fact that we as an expat community have heard no tales of people sent to prison for driving on a valid US license probably says something. As their nice Queen once said, they are a pragmatic people, caring more for practice than theory. Which is probably why it doesn't bother them to have 3 sets of sometimes conflicting laws on the subject.