OK My fault, I missed the SER and read SE. I am with the other guys I am not sure why they want the neutral insulated but rulz is rulz. That has been in the code for at least 37 years, it was not new in the 75 (the oldest book I have). It might be interesting to look at the ROPs, see if anyone wanted to change it and what the CMP had to say about it.
The rebonded neutral is still a violation, even if this was not serving a spa or pool.
Whether the AHJ is happy with the "existing" loophole or not is up to him. If I did have to hold my nose and let that go I certainly would not be very flexible on the next installation. I would take the time to be sure it was completely compliant. I would not want to compound the insulated neutral thing by ignoring something else.
