I had an almost identical experience calling CS about a third party booking. The CS rep said it was okay because the guest had traveled on business before. (It's true that a business account CAN create reservations on behalf of others and are covered separately in TOS, but there was no business coordinator involved in this res...just a friend booking for another on a pleasure trip.) I asked him to verify that their TOS didn't cover 3rd party and he came back with "well they're not recommended..." Like you, I asked to have an e-mail from legal saying that insurance would cover in this case, as it clearly wasn't covered under TOS. He backpedaled pretty quickly. I gave him a bit of a dressing down for giving bad advice against TOS and leaving both the guest and I without insurance or Airbnb support if things went south.
Hosts really need to read TOS backwards and forwards - IME many of the CS agents are NOT well educated on TOS - they mostly fly by the seat of their pants on what sounds good to them. It's easy when they don't have skin in the game.
Whenever 3rd party reservations come up I ask the guest to get in touch with customer service and re-book under the profile of someone who is staying.