There is a huge argument at the mill I work at. To test for voltage in a racked out 480v bucket, PPE (rubber/leather glove combo and arc flash face shields) is required. For LOTO, this is adequate. The problem arises when I (or other electricians) need to troubleshoot the bucket, do rewiring, change fuses, or whatever.

My opinion is that there is still live voltage on the line side of the disconnecting device INSIDE THE BUCKET, and all the potential of the bus, behind the bucket, is available for the 'Last Big Kaboom'!

I want (and will keep) the gear on! Keeping a standard among others is where the contention is. You have all heard the arguements: hot, cumbersome, awkward...!

Is my concern real, or is the ‘Safety Nazi’ moniker justified?

Your concern is real and correct, here is a similar incident you can show in your next Nazi speech.

http://www.hss.energy.gov/csa/analysis/oesummary/oesummary2009/2009-04-01.pdf

Working in a de-energized bucket

IMO
While I agree with the need to don the proper PPE when testing the bucket for proper de-energization, I would take issue with the statement that it's a good idea to keep the PPE on at all times. The incident Zog referenced is fundementally different from going into a de-energised bucket to troubleshoot. They were interacting with the main breaker. Wearing the additional PPE will make sense when there is a chance of inadvertent exposure to energy (usually by the design of the interior). I preach safety 24/7 to my crews and supervisors however we make informed decisions before we perform any work in the de-energized bucket - up to and including shutting down the MCC entirely. Ensure your safety through testing, knowledge and training.
Wearing your additional PPE is a great idea when working de-energised - it is a personal choice. Company policy, regulations, equipment design and exposed energised electrical parts are the determining factors when making the procedural rules for everyone else.

The bucket is not de-energized, there is still voltage on the lone side and the arc flash hazard still exists.

No question there is a hazard - I think it's the risk that's important here.
Quantifiable risk analysis is something we need to do for every job where there is an electrical shock/Arc Flash hazard. Exposed energised parts raise the risk profile, adequately guarded parts do not increase the risk. NEC and CEC both do an excellent job of describing guarding so that's what I use for reference.

The OP never said gaurded. If they are gaurded then it becomes a grey area and like you said a careful dance involving risk.

I missed the fact that the OP didn't specify guarded parts. My bad...

Thanks, I think I get the jist...

Thanks for the feedback. I think I get the general idea. With the bucket off, after checking the load side of the breaker, with finger-safe breakers, it is reasonable to believe that the Electrician is safe performing work with out the Arc-flash PPE. I think also what I am hearing is if the breakers (or fuses) are not finger-safe or there is exposed buss, then the PPE stays on.

Ironically, last week I reset a 480v 60horse motor. When I put the switch to hand to bump the motor, (shop procedure after a reset) the arc flash was in the wire way next to the starter in the MCC. (that long skinny door) The motor feeder cable was shorted about 45 feet away. It was a minor event, with minimal smoke and no real damage. But to me, the event was a reminder for me to always know where I am at, and look to see where "she" will bite me!

Thanks again for the feedback.