Centaurus I agree with everything you say, but you didn't address the actual question!
It is correct during the One Engine Inoperative landing checklist for the pilot-not-flying (the one holding the QRH) to read out both the challenge and response ie "Landing Gear...Down". The pilot flying then looks over and confirms that the gear is down and says "Down".
Sometimes at these sim sessions when you know the instructor is wrong, you have to be nice but assertive and correct the errors of their ways. Knowing where to find the reference in the company manuals that supports your argument without any hesitation helps too!