Saw the same on a fan switch, they had bridged out the permanent live for some reason but the sw live and neutral still went through the switch. Also according to my old boss who is probably about 80 by now he managed to kill someone whilst he was an apprentice, he was told to pull a fuse and then the one above it, this was back in the day when the neutral was fused as well, so he pulled the neutral fuse, light went out and then pulled the live fuse above it, except it wasn't the correct fuse for whatever reason.
As for the sleeved neutral, this takes me back to the twin red cable we used to use, more than once someone managed to wire the lighting loop entirely in twin red, I would never use it as it was so easy to do, I seem to remember there was a very faint white line on one of the cores of the red as an identifier. The same thing probably happened with the above photo.