Hi,
Sorry I am a late entry to this topic, I have just joined recently. The situation currently for Australian Military is that they can accept awards from foreign countries, but are not permitted to wear them on uniform unless the award is officially approved and appears on their personnel record.
There is a list of medals which have been authorised after formal offer to the Australian Government, for which there is basically automatic approval for members who receive it after the authorisation - MFO, UN, NATO and others. More information can be found at following location:
http://www.defence.gov.au/Medals/
This policy is much relaxed on the policy in the past, for the Korea/Malaya/Vietnam era where foreign awards were generally not accepted. There have been quite a number of Australian military personnel, long since retired, who are now being allowed to accept and wear awards that they were offered decades ago and at the time were refused permission to accept.
Attached pic is of the medal group of a RAAF member who served during that era, as a fixed wing pilot in Korea and then as a helicopter pilot in Vietnam. He was offered the US Air Medal for I believe rescuing some US Marines who were under fire in Vietnam, but was not allowed to accept the medal. Then 40+ years later when the policy was relaxed he was authorised to accept and now wears the medal.