Is there a technique for using excess pension assets to pay for group life insurance coverage for ACTIVE participants? If there is, are the death benefits from the group policy taxable to the beneficiary? Does it make any difference if the plan in question is a church plan? I see in the Code a section 7702 that seems to permit this but I've never seen this in operation before.

Sure, the plan can be amended to provide life insurance coverage using individual or group insurance. Not uncommon (unfortunately); usually a multiple of the projected pension.

The "pure insurance" death benefit is tax free to the beneficiary provided the participant has paid taxes on "ps 58 costs", which are an approximation of the premium.

The "pure insurance" is the insurance face amount less the cash value. It excludes any non-insured death benefit that the plan can provide.

I'm not sure, but I don't think the church plan rules would be any more restrictive.