I've done a fair amount of thinking about this issue, and I am still a little confused as to what exactly is the problem.
If a machine will safely lift a ton of dynamite forty feet, then I fail to understand how it cannot also safely lift a man the same heigth.
I also have lessening respect every day for paperwork requirements....they often reach the point of sheer idiocy.

But- getting to the issue at hand. I see no reason why someone should not be able to make their own lift basket. What is important is to understand what will NOT work.
A pallet slipped over the forks is generally a bad idea. Pallet lumber is poor, likely to break, and can slip off as easily as it slipped on.
The basket needs to be securely attached to the machine. A c-clamp won't do, as the forks are tapered, and the clamp all to likely to come loose. A common method is to use a short length of chain, with a clasp.
You need some form of secure guard rail...these are typically located between elbow and shoulder level.
Some places also mandate a screen between the moving parts of the lift, and the basket. A good idea.
I'm not so sure about the places that mandate a part of the cage to go above head level. While intended to make it less likely that you will bump your head, it also make access and working difficult...to the point that folks add ladders to the cage....definitely not to be reccomended!

Now, what about restraint? An ordinary forklift I expect would be considered as a scissor-lift is, and not require supplimental fall protection.
With the type of lift you're discussing, I believe that it would be considered as a boom lift, and some sort of fall restraint is required.

Fall protection comes in two basic styles. One uses a lanyard, and requires a full harness be worn. The other uses an inertial tether, and a simple body belt is adequate. You are permitted to "tie off" to either the basket, or the structure where you are working.

Not addressed is the matter of communication. Good communication with the operator is essential. Ambient noise, language issues, and poor acoustics can all make communication difficult. Over the distances you're discussing, I'd want some sort of communication device- whether it's a walkie-talkie or a cell phone, I don't care.

On another note: when it comes to your safety, regulations be damned. It's your butt, and you have every right to refuse to endanger it. Will such a stand put your job at risk? Probably- but you'll also lose your job if you get hurt. Making hard calls is part of what being a professional is all about.