The purpose of the flight was to complete a flight review for the commercial rated pilot in the left seat with the flight instructor in the right seat. After takeoff and about 300 ft agl, the flight instructor reduced the throttle to idle to simulate an engine failure. The flight instructor expected the pilot to make a gradual right turn to land mid-field on the intersecting runway. The pilot did not respond as expected so the flight instructor assumed control, made a right turn, and lowered the airplane's nose. About the same time the pilot thought they were too low and advanced the throttle full forward. They felt the airplane shudder and experienced an aerodynamic stall before it impacted the ground. A postimpact fire ensure under the engine cowling that was extinguished by the passenger using the onboard fire extinguisher. The airplane sustained substantial damage to the fuselage and both wings. Examination of the propeller noted curling and chordwise scratches on the blades. Additionally, the engine monitor indicated the engine was turning at 2,625 rpm at the time of the accident, consistent with the engine producing high power.