When I run a sparring session - we don't grapple as part of regular sparring, we grapple separately. But I've been thinking of changing that. Why I haven't so far is I've found that once winded, they tend to go all grappling - or, perhaps better described as "stalling while grappling". But maybe that's not so bad, I'm not sure.
Sweeps are allowed and strongly encouraged. A downed fighter may be jumped on and punched or kicked within a second or two of going down.
We don't leg kick. You know why? Because we're pussies.
As for the rules, beginners are pretty much covered with kid gloves for a month or two. Everyone else, just spars. Head contact at all times, groin contact at all times. When guys in the gym ask me why groin contact is allowed I tell them, "next time you take a shower, before you get dressed, stand in front of a full length mirror, throw a slooow side kick.... and tell me about protecting your groin."
Hey, if you're going to kick, you damn well better be protecting your groin. Otherwise, you're nuts. (see what I did there?)
Levels of contact are determined by the experience and desire of the participants. Nobody fights outside their limits, nobody is taken advantage of. We have a great safety record over decades of sparring.
You are allowed to keep your hands down all you want. Good luck with that plan, but you would soon be the most popular guy in the gym, oh, you betcha'.