So, I admit that I've worked in both the student loan industry and in the tax industry, so maybe I'm biased. But ethics doesn't really enter the picture when it comes to IRS and Dept of Education FAFSA rules - unless you're talking about blatantly lying and committing fraud.
"Gaming" your income is part of the... err... game the government plays with you. If the government doesn't like the loopholes, then the loopholes get closed.
But the truth is, in all likelihood, any way you can legally "game" your income is something that is intentionally built into the system to create incentives for certain kinds of income/saving/spending.
No one is really getting one over on the government. If the government doesn't like what you're doing, it takes you (or someone like you, but probably with a higher income) to court. If it doesn't like the precedent that gets set, it changes the law. More often than not, though, the government is silent on loopholes, which is viewed as a tacit approval.
Someone, somewhere has said, "Hey, I think people might manipulate their income so that there's no EFC." And the reply was, "If people are gaming their income to that extent, then there probably should be no EFC."