In the USAF perhaps the FE doesn't touch the power levers. At Hawkins & Powers Aviation, the FE certainly does touch and manipulate the power levers, especially on the drop.
The HPC130A is type certificated for two crewmembers; the FE is optional. All crews without question have opted to use the FE. It's company policy, and everyone flies with an FE. All crewmembers are flight engineer qualified. In most cases, all crewmembers also hold a mechanic certificate with airframe and powerplant ratings.
In the case of Mike Davis on T130, he was commercially certificated as well as being an experienced FE, and could crew from the middle or right seat. All three members of the crew were able to perform maintenance, carried tools, and were FE qualified.
Crewmembers of each type flown there (P2V-7, C-130A, PB4Y-2, and C-97G) are mechanics, and carry tools, as well as a full compliment of spare parts (including built up tires, and a spare GTC in each herc). In the case of a couple of the airplanes, the two or three man crew does the full workload of a former 11 man crew, plus the entire support squadron that maintained the aircraft. It means a relatively high work load with a lot of manual labor and a limited number of people qualified and able to crew the airplanes. However, it's necessitated by the operating environment and requirements of these aircraft.
Being able to work on the aircraft as well as fly it is standard fare in the tanker industry; it's very necessary. There are a few exceptions; most military pilots coming aboard aren't qualified to turn wrenches, and aren't asked to. Several of the former C-130 drivers there are military, mostly Naval Aviators. No herc pilots there are currently military/former military. One is a former civil P3A driver. The Director of Operations is a former Navy P3 driver, and does some relief work in the hercs. Stevie Waas was civillian all the way, and a tanker driver from his youth.
All training is done in-house, excepting industry standard training, such as the National Aerial Firefighting Academy, some simulator training, etc. Primarily, training is done with live loads each spring, and as required during lulls in the season. Groundschools, type ratings, FE ratings, etc, are all done in-house. Occasionally an outside student is taken during groundschool, and taught inhouse.
There is really no preparatory background for this kind of work, and there are no schools or training programs for tanker pilots. The closest outside work would be ag work (crop dusting), though very few ag operations any more use large airplanes, or do the type of mountainous application done with the tankers. As a result, only limited training is available, and most training takes place in the field and on the job. Typical upgrades are five to ten years, depending on the individual and opportunities.
Typically for takeoff, the FE will set the power and take care of it until trend monitoring is done, then release it to the captain. The FE sets power during the takeoff under the captains hand and maintains the power levers through the takeoff. The same applies during the drop; the captain will make the drop with both hands on the yoke in most cases, and the FE will set power off the drop and limit it as required. The captain or copilot will operate the power levers during landing, depending on who is performing the landing. In most cases, it's always the captain.
There's really no comparison to the way the military flies these airplanes, and the way they're operated in the fire service. Pilots load retardant, get dirty, wash the airplanes with a brush and a firehose, change tires by hand, and perform the A & B checks in the field, etc. At least one Captain has over 30 years experience performing maintenance as well as flying these airplanes; he runs the T-56 engine shop and does all the heavy maintenance (including hot sections) on them.
The crews are extremely qualified in the airplanes, in every aspect of their operation and maintenance, from IFR operations to Non Destructive Inspection techniques, structural repair, pneumatic troubleshooting, fuel systems, hydraulics, etc. The FE's are required to be the same, often to a much greater degree mechanically than the pilots, though few regular FE's are also pilots.
I promised a link to Mike Lynn's pages on Steve and T130. The links at the bottom of the following site will have pics on the airplane and things related to it, as well as some of the pilots who flew it. It was put together by a close friend of Steve Waas, and a genuine authority in the industry.
http://home.earthlink.net/~leadplane/_wsn/page3.html
I'm burned out on this thread. Have fun with it.