Every part of the safety earth ground from beginning to end must be very low impedance and able to handle the fuse/breaker threshold current for it to do its job. But if we are testing only the GI, the fault I mentioned would be internal. Ive seen similar types of failures in transient suppression diodes. Or corrosion might do that. A failure like that would likely be rare but could happen and hence the point that UL would not allow that test in production.
In your case where the GI was checked and failed, the simple test likely never gives a false failure (at least not something I can think of). Its only that it can give a false pass. Ie, if you did the simple test and it shows the GI is bad, assuming you did the test accurately, you can feel comfortable that the device is bad.
why they can't incorporate a status LED into a failsafe galvanic isolator.
With 12 volts to power some sort of circuit, this probably is possible. Why you cant find one.. dont know. Maybe there isnt a market? I would think GI are very rugged to begin with and have a very low failure rate. Its a very simple device that can handle a lot of current. I would think the circuit that is detecting and driving the indicator LED is much more likely to be damaged by lightning since it has an external 12 volt input (with possible lightning induced transients) than the actual GI diode set itself..