It's a tricky one, isn't it? In general, I'm a strong supporter of the idea that the flight crew are almost certainly in the best position to make any judgment in respect of the safety of their flight: hence the for a perfect crew, it will always be safer to allow the commander to overrule any arbitrary regulation (even in non-emergency situations).
In practice though, the airline whose crews make sound safety judgments may lose out to the airlines whose crews push the boundaries just that little bit further. Hence explicit regulation that the flight crew cannot overrule is an essential tool in ensuring a level playing field. It was with that attitude in mind ("Well they're giving RVR 400 m but I reckon it must be at least 700m, eh? :wink:") that the approach ban was introduced. You can't police whether the crew can actually see the visual reference at DH, but you can stop them from putting themselves in the position of needing a little creative vision at DH by mandating a minimum reported RVR. However, that means that you occasionally get some daft situations where something that's perfectly safe is contrary to the regulation.
(BTW I don't doubt for a moment that NoJoke's crew risk-managed this perfectly -- I just think this may be one of those daft situations.)