I'm not trying to argue that it's wrong. I'm trying to understand what the mechanism is here.
Generally if you look at the law there's a few points true:
1. The law usually makes sense if you look at it from the viewpoint of the lawmaker.
2. The law tries to be fair to all concerned.
3. Laws made by one branch of the goverment will typically not take into account any laws, regulations or categorizations made by another branch of the government, let alone supersede or be dependent on them.
A statement like "A part 61 flight school cannot be SEVIS approved and therefore cannot issue I-20 visas" seems to contradict all three of these points.