So you'd rather trust the surface bearing area of a tiny 1/8" steel pin in a barrel extension rather than the two 0.277" pins in a upper receiver vise block? that doesn't make sense.
I do know one current & one former CF armourer who have taken apart & assembled hundreds of Diemaco / Colt Canada uppers using a Geissele reaction rod and have never had a issue. So while this is generally an accepted way to do it, it is not necessarily the best way.
You are correct that a upper vise block is the correct way to torque a barrel nut. I use clam shell upper reciever vice block for milspec AR15's. For billet uppers I now use the new Wheeler engineering upper receiver vise block that clamps on the top picatiny rail. Works on any flat top picatiny rail upper regardless of the takedown / pivot pin locations or receiver dimensions. They are $38 USD at brownells. I use the Geissele reaction rod for installing muzzle brakes, gas blocks and handguards once the barrel nut is torqued.
I don't think the index pin takes all the torque when using a reaction rod, (in my mind anyway) the reaction rod holds the barrel stationary, the barrel slips into the receiver extension with a lot of bearing surface (sides, base, and the back of the lip the barrel nut presses on. The only force transmitted to the receiver extension or the index pin would be the force from the lip on the barrel extension interacting with the back of the barrel nut. This is less surface area than the barrel to the receiver surface area, which in my mind anyway means that just like how you can tighten a bolt that is going through two pieces of steel without actually holding the head of the bolt and only turning the nut. The friction of the bolt in the hole is greater than the torque created by tightening the nut on the threads so the nut/bolt tighten without holding the bolt head. In the same way I think the barrel nut will be slipping on the barrel extension while it tightens down rather than transmitting that torque to the receiver.
So, I may be wrong but I've never seen any signs of stress around the index pin on the soft aluminum receiver barrel extension (I've built quite a few uppers).
Either way, in my mind both methods are correct in that they both give you a properly torqued barrel nut and after that I leave it up to the assembler to choose whichever they like the best.
I also have one of those Wheeler blocks that can grab the pins or the rail. I'll use it if I can't use my reaction rod, like if I am working on an AR-10 but for the most part I only use that tool to hold the upper in the vise while I assemble the rest of the upper receiver (FA and port door)
When using the clamshell style receiver holder 100% of the torque exerted on the barrel nut is transmitted to the base of the thin threaded section of the receiver barrel socket, that looks like a weak point to me, especially if someone goes to the upper range of the torque specs for the barrel nut in order to get gas tube passage alignment.
Again, I could be completely wrong but I've built a few AR's and have a lot of mechanical experience. So unless someone can show me more evidence than what the 50 year old military armorers manual says I'll continue to successfully assemble my rifles the way I have been for the last few years. If I break something doing it this way I will definitely be posting pics and an explanation to warn others.
Don't rule out that the military doesn't change very quickly, especially if what they're doing is not creating any problems (they're no different than any other business in that regard), maybe the reaction rod is a better way to do it but the military hasn't switched to it because what they're already doing is working just fine. Buying new equipment and amending the armourers manual cost money, hard to justify that on a request when the tools and manual already being used are not creating a problem.
There are better battle rifles out there these days than the 60 year old AR-15 but they still use the AR so that tells you that the military doesn't always use what's best or do things the best way possible.