As an engineer you know we make our bread and butter answering the questions about what should be done when the OEM specs aren't met. I would not disagree with your statements, but I do think you are being overly conservative in this application. Maybe it's just my experience as a home builder seeing other applications, but I would still be comfortable with his suggested substitution. There are only a few critical applications like landing gear, cylinder head retention and prop bolts that raise the hairs on the back of my neck. Even if one bolt did fail on the water pump (and why would it since preload is most of the stress) you'd just get a leak you could address. I think the probability and consequences in this application result in low risk.