Short of installing a tachometer, how can you tell if the engine is running while coasting in neutral? Please don't tell me that's bad for the car because I don't believe it. I live in hill country and have been doing it for decades in all my cars with no problems. My neighbors with Prius' do it to and we all agree that the mileage is at least 10% better by coasting at every chance. Also, do the fuel injectors shut off when the throttle is closed? Corvettes with auto trans do, 6 speed ones don't???? I've owned both and have always coasted at every chance. Thanks.
The engine is rotating above 43 MPH, no matter what. (unless you are in N, it can't start the engine in N, so may over rev Motor/Generator1 in N) No regenerative braking or charging of the HV Battery happens in N. Coasting can be done in D, just lightly push the accelerator until no arrows show energy flow. The fuel injectors turn off whenever the engine is only running to save M/G1, and in B mode, where it is acting as a air pump. Coast all you want, just do so in D, not N. My 2 cents.
In your vehicle, (and mine, as I have two 2005 and one 2007 model) coasting in neutral is really not needed. Why risk causing more issues for yourself. You can easily find the sweet spot on the throttle where all the arrows disappear on the battery/engine display. You can feel the difference in the car when you're there. You can even do this on flat, slightly up or downhill straightaways and maintain 99 mpg on the graph. Practice, become one with the throttle and let the Prius do it's job.
Your other cars are completely and totally irrelevant to the Prius Neutral issue, because they didn't risk overspinning and damaging MG1. They didn't even have an MG1. You can simply take it on faith that Prius shuts off its injectors when coasting (and not needing to warm the engine or recharge a depleted battery). But above a certain wheel speed, the engine still needs to spin to prevent possible transaxle damage. (There is some margin built in, so you may well have not triggered the real overspin problem. Yet.) Leaving it in D allows it to protect itself, then just feather the gas pedal to get rid of the power flow arrows and minimize the synthetic 'engine drag'. This maximizes the glide. Neutral defeats the self-protection, and should be used only if you experience something like the infamous (and possible mythical) Sudden Unintended Acceleration, or need to use a tunnel-style car wash.
In regards to the idea of coasting hurting the car- You should be aware that the Prius transmission is always engaged. There are no clutches or synchros. The inputs are permanently mechanically connected to the output. What you are thinking of as "neutral" from your other cars does not exist in a Prius. You're just telling the computer to emulate the behavior of an old car in neutral. Nothing is being mechanically unlinked by shifting to N. You are just telling the computer to ignore the gas pedal, disallow engine starts and stops, disable MG1 overspeed protection and disable the regenerative brakes, but all the same moving parts will still move. edit: list of what neutral does from Jimbo's correction
Also, Just a comment, if the engine is running when you choose N, the car can't turn it off. The Prius needs to have M/G1 enabled to start/stop the engine; any gear but N.