Ugh.
If your friend takes delivery of the car while a tax credit is in play, he won't be able to [legally] claim the credit; nor will you, as a second owner. However, the car likely still counts as "eligible" for the credit. Therefore, someone down the line who otherwise would have gotten the credit will not (or will get the next lower amount). While, that doesn't make it "against the rules," it does lend a certain air of douche-baggery to the whole deal.
I'm not at all surprised that someone is thinking of doing this. I am a bit surprised that you're trying to defend it as totally above board, though. Then again, maybe it's just a sign of the times. (Donald, is that you?)