They are attempting to argue that 404 is ambiguous, so we should avoid it. They do not to my eyes meaningfully highlight a replacement outside of some very specific cases.

I strongly disagree with this stance as I don't think 404 is ambiguous at all. Although it would be useful to know at what point in the broader hierarchy of a specific resource requested the unavailability starts: Ultimately 404 just means the specific 'tip of the spear' resource requested is not found.