Good morning Mr. Armstrong:
First, you should not feel guilty for using a 529 Plan for its intended purpose.
To answer your questions, there is little guidance on change in ownership rules for 529 plans. Not every plan allows changes in the account owner, either. It has not been defined by the Department of Education, nor would it be, I would imagine, since this would more appropriately fall under the IRS. The IRS also has not provided specific guidance regarding changes in account ownership, to my knowledge.
Under existing rules, however, you can absolutely change the account owner to an older sibling. Further, since the original contributions were considered completed gifts, it would not be subject to gifting rules.
As for the five-year rule, if the account has been "superfunded," then things become more complicated, particularly where state tax benefits may be involved. I'm going to defer to your state plan sponsor for guidance in the case of the latter, and point you to this article regarding Superfunding in general: http://www.savingforcollege.com/articles/10-Rules-for-Superfunding-a-529-Plan-643
As for whether the DoE or IRS have taken action regarding a change of 529 ownership, I can only answer that I am not aware of any publicly disseminated information to this effect. There may have been actions taken by the plan providers related to AML or Fraud that would touch on this, but otherwise I do not believe so.
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.