From my copy of the Boeing QRH (Albeit it for the NG series).
Above 80 knots and prior to V1, the takeoff should be rejected for any of the following:
Fire or fire warning
Engine failure
Predictive windshear
If the aeroplane is unsafe or unable to fly
From an old copy of a flying manual for the Boeing 733. Boeing recommended that once thrust has been set and the take-off roll has been established, rejecting the takeoff solely for the illumination of the amber MASTER CAUTION light is not recommended.
It would seem to me that unless your colleague's company SOP's dictate otherwise he was absolutely right to continue the takeoff if the scenario was as you described, and the TRE has no case!