The fact that the installer is blocking only some of the USB devices seems just another mistake of MS, they tried to prevent the problem that caused the dive letter reassignmentduring installation and for that they should have blocked any USB storage device.
Why do you accept the highlighted text as fact?
I believe Microsoft is trying to find a way to install on systems which don't have the space needed on the OS partition to complete the install.
For years, the EFI system partition was being assigned a drive letter, in error, on some systems. It has never happened to me, but has happened to many folks.
The 32 GB partition size may be relevant because many systems had a 32 GB prefetch drive or tablets were sold with 32 GB drives. Using Rufus to set up a Install Media drive my be outside the box since it creates 2 partitions, not just the FAT 32 maximum size partition of 32 GBs.
But i agree, it is too bad the conversation seems to revolve around the install as opposed to the actual build upgrade... I think I am going to make good use of the Sandbox in 1903..