The simple ones first. No, a Ground Instructor does not need to be a pilot. Just 18 years old, R, W, S, and understand English and pass the knowledge test(s).
Now it gets fun. I got my GI certs under Part 143. In the late 1990s there was a major rewrite of 61 and GI stuff was moved there and 143 went away. One of the things in the NPRM is:
"Section 61.223 Ground Instructor Endorsements and Authorizations
This proposed section would list the endorsements and authorizations that a ground instructor could give. A similar section does not appear in part 143."
Note the last sentence, which is probably why Mrs. Ruth wrote her letter. The numbering got off, there were plans to make GI certs category and class specific that didn't happen but we now have 61.215 which post dates the Chief Counsel letter.
So now if we break down 61.215:
c) A person who holds an instrument ground instructor rating is authorized to provide:
(1) Ground training in the aeronautical knowledge areas required for the issuance of an instrument rating under this part;
Aeronautical knowledge is FAA speak for the written test so an IGI can run a ground school class.
(2) Ground training required for an instrument proficiency check; and
Ok, that's great but when you look up a IPC, there's no requirement for any ground training!
(3) A recommendation for a knowledge test required for the issuance of an instrument rating under this part.
Sign, date and put your cert number on the dotted line.
But nothing about any flight proficiency training. So I'd say to the OP, they could but not for the last 10 years or so.