HELICOPTER OPERATOR WITH CDW; DESCRIBED NMAC WITH CESSNA DURING ATC APPROVED PRACTICE ILS APPROACH TO MMU; REPORTER'S CONVERSATION WITH ATC INDICATED CONTROLLER TRAINING AND CONTROLLER CONFUSION.

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I CONTACTED MMU TWR UPON TKOF FROM NEARBY HELI PAD AND REQUESTED A PRACTICE ILS RWY 23 INTO MMU TO REFUEL. THE MMU CTLR APPROVED THE APCH AND TOLD US TO CONTACT CALDWELL TWR WHICH IS ABOUT 7-8 MI TO THE E OF MORRISTOWN ARPT. THE FAF FOR THE MMU ILS 23 IS MOREE WHICH LIES JUST INSIDE THE CALDWELL'S CLASS D AIRSPACE. I CONTACTED THE CDW TWR CTLR AND TOLD THEM WE WERE NE OF MMU AND SETTING UP FOR A PRACTICE ILS 23 BACK INTO MMU. THE CTLR SAID THERE WERE 3 ACFT IN THE CDW AIRSPACE. THE CTLR CALLED TFC TAKING OFF RWY 28; WE RPTED TFC IN SIGHT WHICH HAD JUST LIFTED OFF CDW RWY 28. ABOUT 30 SECONDS LATER; OUR TCAS ADVISORY WENT OFF AS WE WERE TURNING ONTO FINAL AT MOREE. WE IMMEDIATELY SAW A CESSNA OFF OUR NOSE APPROX 250 FT AWAY AT OUR SAME ALT OF 2000 FT. WE BANKED SLIGHTLY L TO AVOID. I DO NOT THINK THE OTHER ACFT HAD US IN SIGHT. I ALSO DO NOT THINK THIS WAS THE SAME ACFT THAT HAD JUST TAKEN OFF BECAUSE IT COULD NOT HAVE CLBED TO 2000 FT IN 30 SECONDS. AFTER LNDG; I SPOKE WITH THE CALDWELL CTLR TO CLARIFY THE NEAR MIDAIR. THE CTLR SAID THERE WAS ANOTHER ACFT AT 1500 FT NEAR MOREE; BUT I DON'T REMEMBER HEARING THIS TFC CALL. I FELT THE CTLR SEEMED CONFUSED AT THE LOCATION OF THE VFR ACFT IN THEIR AIRSPACE AND SHOULD HAVE BEEN MORE PROACTIVE IN SEPARATING THEM. THE CTLR ALSO RPTED THAT THEY WERE DOING TRAINING AT THE SAME TIME OF THE NEAR MIDAIR. RECOMMEND THAT CALDWELL TWR AND MORRISTOWN TWR NOT ALLOW PRACTICE VFR APCHS IF THE AIRSPACE IS BUSY.