On the mountains, all the Unmarked cars seem to be VE SS Commodores, rather than XR's and AFAIK, HWP only use Typhoons. Also, I'm sure NSW Police vehicles have to be registered in NSW.
Definitely wouldn't turn their lights off; they'd be in a world of trouble if a member of the public reported something like that.
Sounds like you've just stumbled on a giant f**kwit, there's plenty of them around. It might even be worth reporting it to the Richmond LAC; I'm sure they'd be interested to know what's going on within their area.