the limit it there simple.
I think was part of the point being made, SMOC, the limit is not specific enough to be a limit. The limitation says do not extend flaps, it doesn't say don't fly with flaps extended above 20000'. If that's what they mean (and I'm certain in my own mind they do) then Boeing should write it.
I agree with you that we should not be trying to this, nor should we attempt to be Boeing test pilots, however, in my opinion, the poor English used in the AOM opens Boeing to challenge if someone were to go above 20000' feet with flaps extended and it all went wrong. Semantics, yes, but that's what lawyers love when big industry cocks up.