This can be a hot topic issue and there is a lot of gray area in interpretation of what is right and wrong. I will try to address them as I see them.
1. I do feel there is an advantage for the coach who has two teams in the same state and they do an FSS by one team. The information may not help both teams, but the expenditure from one team does help the team that doesn't spend their money for the same information.
2. Unless HD chimes in and says otherwise, my feeling is what they consider to be 'collusion' is when two coaches agree to gang up on another team's recruits. There is no question that this is wrong, and a lot of us have had it happen to us.
3. Having been an assistant baseball coach on the high school level, I know that a lot of information is shared between coaching staffs on a recruit should they have a working relationship with that other team. The information would be similar to that shared by an FSS report, and it is not considered unethical to do this in reality.
4. There is no rule against a coach going into a recruit's home and say derogatory remarks about another team/coaching staff. Some players buy into what is said and others look upon their doing that with a jaundiced eye. Yes, you need to sell your program, but it does not have to be at the expense of some other program.
5. I know for a fact that high school coaches will influence a player toward and away from certain programs depending on their 'political/social' contacts with the college program. That plays little direct part in the game outside of prestige. Yet, I was friends with the head track coach who wanted his son to attend Tennessee's track program, but instead, the boy went to Tulane that also had a quality track program, at that time. The coach did not like it as he had contacts at TN, but he was willing to accept his son's decision.
6. Agreeing not to go after a player is akin to college programs staying away from certain areas of the country. There are many reasons for their not recruiting in an area, and sometimes it is due to informal agreements with certain coaches. However, this is only an agreement between coaches or their staffs and does not preclude another school from coming into that area.
The point here is that you can agree not to go after a certain recruit, but that does not preclude another team from going after the player. If anyone doesn't think things like this happens in real life, then you need to revisit your thinking on this. It may not translate in the high school and college ranks straight to how HD works, but in similarity, there is no question that it does.
A good example of this is the high school in Florida that had sent a lot of players to the University of Florida. When Kiffin recruited one of their players, the high school in question began a war of words with TN over their coming to 'their' high school to recruit, and went as far to accuse Kiffin of recruiting violations on their athletic sports page. I would ask where was the 'collusion'? Was their collusion with the 'agreement' the high school staff had with the University of Florida regardless of the degree of formality.
The bottom line is do you wish to participate in some sort of information exchange when receiving a note from another coach. HD has already said they do not want information exchange on FSS, and on that point, there is no question. You certainly do not have to divulge whether you are going after a player, or if they are a primary or secondary recruit. It doesn't matter, and would certainly be a mistake to make any response if you have designs on the player yourself. Should you not be interested in the player, there is absolutely no safety net for the other team to go after a particular player as there could be many schools in a regional or national level that might have interest in that player.