"Chip Jones" wrote
(d) The controller doesn't know about cruise clearances

I say "d" with a twist: The controller knows there is something in the book
about a cruise clearance, but doesn't know how a cruise clearance works.

I agree. This is exactly what I'm talking about - he knows that
cruise clearances exist - meaning he heard the term somewhere,
probably in training - but he doesn't actually know anything ABOUT
cruise clearances, in the sense that he would be able to use them.

This seems most likely to me, since the controller also doesn't know how a
visual approach works either...

I think that's a bit unfair. He probably issues visual approaches
properly under normal circumstances. This is a special circumstance.
He COULD be an ass about it - keep the plane at an altitude high
enough to assure radio comms and force the pilot to accept the
resulting slam dunk - or cancel IFR. Instead, he's doing what makes
sense. The problem is that he doesn't know the correct phraseology to
accomplish this, and as a result he's breaking regs because he doesn't
know the correct magic word to use.

Are the regs unnecessarily complicated? This is a guy who talks to
airplanes issuing instructions and clearances 40+ hours a week, every
week. If he can't keep all the regs straight, what sort of chance
does a weekend pilot have?

Michael