Ok well that is my point about the flaw. If the emergency disconnect has OCPD, then why not be exempt from the "nearest the point of entry " requirement as it serves no purpose? Perhaps 230.85 and 230.70 could be combined into more simple and logical language that doesn't result in meaningless requirements.
230.85 is mostly an allowance in 1 & 2 family dwelling, (to bond or not to bond, that is the question).
Either you count the outside disconnect (that happens to also be an OCPD) and call it an "Emergency Disconnect, Service Disconnect" and then bring in separate neutrals and grounding conductor (just like any "subpanel"). (230.85(E)(1))
Or you are allowed to ignore the outside disconnect (that happens to also be an OCPD) and call it an "Emergency Disconnect, Not Service Equipment" and bring in just the Neutral conductor thru into the inside panel that is the service panel and then bonding of the N/G there. (230.85(E)(3))
230.70 is general requirement that might also apply to a dwelling unit 1 & 2 Family. 230.85 amends partially the requirement of 230.70 only related to 1 & 2 Family dwellings. Where 230.85 does not reference distances of the service conductors requirement of 230.70 would stand.
Is there some major crisis this new requirement resolves? It seems like we managed to survive for the last 100 years without an outside disconnect being required.
My personal opinion is that it should have been required to be part of the meter assembly. It should also have been required to be not resettable.
This section was given to address the fire personnel issue when arriving on a fire scene, unable to proceed safely until POCO arrive to disconnect power, While still making allowances for 1 & 2 family dwellings that allows for adding an "Emergency Disconnect" without having to fully upgrade the entire system.