I wouldn't "move out into" the lane when a car approached, I'd already be there. Since overtaking traffic is rare, just how is this unsafe? No other vehicles are even coming! When one does come along the cyclists will see and hear it approaching with plenty of notice to move to the shoulder if they choose.
I do have one point to add in this particular circumstance: Although there was good visibility where this incident occurred, the road overall was very hilly, and traffic, though sparse, is sometimes going more like 65. Even with no cars behind me, I feel like a target in the middle of the road.
What if someone comes up over a hill, is distracted for a second, and looks up to see me in the middle of the road? Dead me. At least on the shoulder I am out of the "appearing" cars way by default, and it's fine if he doesn't see me as long as he stays off the fogline.
-sv