I've never heard of this, and don't see it in my copy of Jeppesen's
"FARs Explained". Do you have the reference?

You won't find it in Jeppesen. It's not an FAR. It's an
official interpretation of the FARs, and is binding on the
FAA.

The Jepp "FARs Explained" book combines the text of the FARs with explanations
by aviation attorneys and excerpts from relevant decisions by the FAA Chief
Counsel and NTSB. I've found it a useful book to have. It has several pages
on logging issues, but I found nothing on this scenario of logging PIC time
while allowing a non-pilot to manipulate the controls.

Barry