There is some information on Northern's website, albeit not brilliantly worded about this:
(My bold where applied)
https://www.northernrailway.co.uk/penalty-fares
So to me at least that says a little common sense will apply, and that FPs are not inevitable in the absence of a P2P but may be applied in certain circumstances. If a ticket machine is out of order, or locked away (has anyone asked about this BTW?) then the common sense approach for the passenger would be to ask the guard on inspection or where arrive at a barrier / inspection at the conclusion of their journey or leg thereof, to approach the staff and explain the situation. If for any reason some jobsworth RPO were not to apply common sense and simply charge for the required journey, then Northern by their own admission on the site above would not be in a position to pursue a passenger unless they had good reason to believe they were not in fact being totally honest.
And frankly as a daily user of services within this Northern Penalty Fare zone I see exactly this being applied by guards, with thus far no evidence of the roaming jobsworths hitting innocent passengers with fines or FPs (or carting them away for interrogation in Room 101) that seem to cause so much anxiety amongst some forum members. Most passengers seem to be able to either procure tickets beforehand, either as e/m tickets of TODs, obtain a valid ticket from a TVM or a P2P, and where a TVM has been offline (something that does seem to be an issue, and one that will be raised the next time our local group consults with Northern) guards are allowing cash and card payments for tickets.
As for the wider concerns about the wording of the scheme, and it's legality I'm pretty sure that Northern / Arriva will have consulted with DfT about it, and indeed the posters dotted around the network do seem to carry the DfT / National Rail logos suggesting that it has been approved and accredited by the same. Indeed the design of the yellow station posters and displays on TVMs seems to be almost identical to those used in other FP zones elsewhere, so I'm guess there is a good chance this is all above board.