No that's not quite right, CPL holders doing an ATPL theory course get a reduction of time under JAR rules but they still need to do an approved course and there still needs to be 10% classroom time minimum (which is little enough). The FTO can't just ignore the requirements of an approved course for CPL holders, they can only reduce the study time from 650 hours minimum to 450 hours minimum. The UK CAA interpreted this as credit for JAA CPL holders only, the actual regulation was not clear.
CAP 804 is the CAA interpretation of Part-FCL, the EASA rules. As you say, Article 8 is the source rule. An ICAO CPL holder can get a reduction in course duration, number of lessons and specific training hours for a CPL theory course, not for an ATPL theory course, and this reduction has to be agreed by the Authority on the basis of a recommendation from the FTO. The UK CAA currently regard this as a requirement for case-by-case authorisation.
I doubt the Swiss are working to EASA rules, this seems to be an exclusively British folly so far. If they have approved an ATPL course for ICAO CPL holders without a classroom element under JAA rules they can do so, but there is an (admittedly quite small) risk that the license may be identified by someone at a later date as not JAA compliant.