That's not what even an experienced player would expect as consequences from switching it off: First shot against me should always overrule any filter settings, no matter what.
From a strict point of logic you are both correct. I'm talking about the intuitive aspect of this setting. If you can't see how counterintuitive this is I'm afraid I'm out of arguments then. And don't let me start talking about logic in general when it comes to ED in which case I'd like you to point to the 'logic' of planetary scan missions... not to derail this topic but as an attempt to explain why my trust in ED's logic is more than limited. But if you can't trust neither in logic nor intuition you're pretty much lost.
I do, even as a non PvPer. I can perfectly understand his point and how he's expecting to get no help at all from authority ships if under attack and the possible reason for it. If this filter isn't meant to do exactly this then there should be another filter doing it instead - because his point is absolutely valid IMO.
EDIT:
Just had a short internet outage and see how my last point was already hijacked, in a way...
Blah blah blah... Only a PvPer would understand... Complete nonsense. The button is what the button is, and has always been.
The logic is, the switch does what it says it will do, stop your ship from reporting crimes committed against you. Any one who shoots at you has your permission to do so, when that switch is set to off. Period. You are attempting to turn this into a Gordian's knot, when it's just a silly granny knot, the OP knitted up himself.
The simple truth is, there is no option in the game remotely like what the OP assumed, or wished, the RC switch is. This is not a PvP question, this is not a bash FD question, this is a why expect one thing, when it's label says another thing. You can't simultaneously be out side of the law, and protected by it. Perfectly logical, if you weren't playing to an agenda.