Guru,
This ones a no - brainer and I can't help thinking you are the one who is at fault!
Clearly either the pilot didn't understand or was distracted by pre departure checks, in which case you should have cancelled the clearance and only permited him to line up when the landing had passed the hold.
It may take up a little more R/T time but it's easier than explaining away the runway incursion for which you may have been mostly responsible.