SAS,
The part that you quoted is not at all relevant, I'm afraid. The section in question relates to the privileges of a PPL(A). Paragraph 1 gives a PPL(A) holder the right to fly an aircraft for which he holds the appropriate type- or class-rating. Paragraph 2, the one which you've quoted, then states that this right does not apply to Public Transport or Aerial Work (other than instructing, which counts as aerial work for the purpose of some rules, but not for this one).
If I let my passenger take the controls, this is not a public transport flight. It is also not an aerial flight. (As you rightly point out, it can't be an instructional flight if I don't hold an instructor rating.) Therefore, the flight is not disallowed by this rule.
FFF
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