In a comment to this post, Rabbanit Chana Henkin offered readers a copy of R. Yehuda Henkin's article "Contemporary Tzeni'ut" from Tradition 37:3 (Fall 2003). I had forgotten that he addresses this issue in that article. Here is a relevant excerpt (pp. 5-6):
Shema is paradigmatic of all prayers and blessings: none may be recited in the presence of uncovered erva [nakedness] of even rabbinical nature. Is studying Torah permitted in such circumstances? Sefer Yere'im forbids it, and for that reason relies on "et la'asot la-Shem" [emergency negation of the law] for a dispensation to permit Torah study within earshot of the songs of gentile women; he is cited by a number of Rishonim. All the more so, this would apply to tefah [a handbreadth of uncovered nakedness].
However, others disagree. Me'iri writes in Berakhot 24a:Seeing a tefah in his wife anywhere that is normally not exposed, prohibits Keri'at Shema but does not prohibit divrei Torah, since seeing causes hirhur.This is also the opinion of sefer ha-Hashlama...
This is important support for permitting men to lecture on Torah and mussar to audiences that include women who are improperly dressed.