A question for controllers - I recall a Usenet exchange a few years back about the tower controller being authorized to clear an aircraft for an approach. However I don't remember the outcome whether the tower controller has this authority. Anyone?[/b]
In my opinion, marineman, you are always wise to file a NASA report anytime you might question the legality of a situation. Nice move, there.
Towers can't actually clear aircraft for any kind of instrument approach (unless they're radar qualified approach control towers, like what dj was talking about.) but a visual doesn't count as one... it's actually an IFR procedure that must be performed in VMC. (500' above the MVA with vis of 3 or greater is the exact requirement to be vectored to it.) However, JO 7110.65 7-4-3 says we (tower guys) can't clear someone for one unless we have an LOA with our IFR facility.
In truth, I don't think it's actually
expressly stated anywhere that we are unauthorized to clear someone for an instrument approach... but we can't because without the radar qualification/equipment we wouldn't be able to provide separation, or ensure the safety of the aircraft conducting the approach.
Contacts are a little different, because they aren't instrument OR a visual approach per se... but like SVFR, we can approve that because there are ways we can separate the aircraft from traffic and/or work with the IFR facility to ensure we don't have a SVFR/Contact Approach vs. IFR conflict.
So to close...

Can towers clear someone for the approach? Yes, depending on the approach, the qualifications of the facility/controllers, and the situation.
If you're flying IFR can you still be cleared for a visual approach? Yes, as a matter of fact you have to be. Remember there's a difference between "IFR" and "IMC." If the weather is IMC (1000 and 3) you can't be vectored for a visual approach, even though you're on an IFR flight plan.
Was that the case here? No. Vis was 2 if I'm not mistaken.
As was stated earlier, the controller should have suggested SVFR or shipped him back to radar. Or marineman could have asked for a contact.
I am curious though, dj... when performing radar functions in the tower... what kind of equipment is that on? Well, we are an up/down facility that uses STARS. The tower also has STARS scopes that we use as our "brite". They are essentially just mini versions of the radar scopes down in the TRACON. the tower scopes are completely certified for radar separation and everything in between. In fact, when we close down the tracon and become a tracab (IE the midshift) the radar controller just uses one of the "brites" to do all radar functions on.
One day i'll get some pictures of my facility and give a little "tour" if enough people are interested.