Recruiting volunteers is difficult and uncertain. It is natural to call on those with experience to help out. Ultimately, a tournament with mentors in key roles is better than no tournament at all.
Moreover, when conflict of interest situations have arisen (at least those I have encountered) those involved have acted with honesty and integrity: promptly informing those present of the conflict and withdrawing as and where appropriate.
That said, both the perception and reality of unbiased evaluation and adjudication are crucial to the value of the experience and success of the event.
You asked about three roles (Inspectors, Judges & Refs). I think their respective needs for impartiality are not the same.
The ‘cookbook’ nature of this role and its checklist approach makes the evaluation standard fairly well defined… We commonly have coaches and mentors from multiple teams participate (they, after all, have the expertise). They generally consult among themselves and escalate if arbitration or additional input is needed.
Conflict of interest in this role is problematic. Judging schedules and assignments can be structured to avoid direct mentor/mentee evaluation but that doesn’t address the fact that when awards are discussed, that team has ‘an expert’ in the room who can ‘clarify’ questions about that team. This is, of course, only a problem when the teams concerned are contenders for awards but recruiting judges only from teams that are clearly going to lose would seem to be a rather uncertain and counterproductive endeavor. We try, where possible, to recruit judges externally.
The bigger issue here is optics. The pace of competition and the various ways in which small determinations can take on larger significance make it very important that field officials (all of them) carry no bias, real or perceived. Of the three positions, this is one for which I feel impartiality matters most.
You asked specifically about role of Heads. The importance of hierarchy varies by event and jurisdiction, of course, but, in my experience, these considerations are of similar importance regardless of whether the official is nominally designated a head.