As I was playing around with GTA V on a Xbox 360, I tried changing the ped hashes for Michael, and noticed something interesting. When the hash was set to a cop, the peds would treat him as one. For certain actions that would normally result in a wanted level, such as breaking into a car, other cops would ignore Michael (presumably searching for a ped with his hash). When the police went into search mode, something even more interesting happened: A search area sector appeared for Michael, as well as for other cops. Even when Michael would enter the search area of another police officer, he would be ignored. So, could it be inferred that GTA V's game mechanics are based on the hashes of the peds, rather than labeling the player as "the player" with it's own hash? If so, modifying these hashes would be the first step to "LSPDFR," and disabling the wanted levels along with adding additional mechanics (ex. Traffic Stops, arresting a ped) would remain.

this is also seen with the female cop in director mode

That is a very very interesting find. Opens up quite some possibilities & probably make things easier for modders