You are missing the point of scenario (B), the load is 1000A continuous in all scenarios. There is no safety issue (overloading/overheating anything), other than the breaker tripping when we don't want it to, and whatever knock-on effects that could have.
Absolutely incorrect.
Please consider scenario (B) further, as you are still missing the point. Let me try putting it this way:
Say you had a normal breaker whose trip characteristics, within the allowable range permitted under the listing standard, along with the conditions of its installation (ambient temperature, spatial density of breakers in its enclosure) meant that it would, in fact, carry 100% of its rated current continuously. This certainly can and does happen. But the breaker is not listed as a 100% breaker, it has not been tested to perform this way, and under different conditions of installation it might not perform this way.
We agree that scenario (A) is allowed. Now substitute our hypothetical breaker for the 100% rated breaker (and enclosure), putting us in a version of scenario (B). What has changed, performance-wise? Absolutely nothing. What new safety issue or problem has been introduced? Absolutely none. If scenario (A) is OK in practice, then this version of scenario (B) is OK in practice.
As a code issue, of course, we can't distinguish between this version of scenario (B), and the version where the regular breaker will undesirably trip. That is the sole reason that scenario (B) is prohibited by the NEC.
According to this statement section 215.2(A)(1) has no reason to exist.
Actually, it is correct that 215.2(A)(1) has basically no reason to exist. Setting aside for the moment the issue of 240.4(B), 215.2(A)(1) is a logical consequence of 215.3 (which tells you how to size the OCPD) and 240.4 (which tells you that the conductors need to be protected by the OCPD). So 215.2(A)(1) is just there to spell out that logical consequence for the reader.
The one exception to the above is the use of 240.4(B), the "next size up rule". If we deleted 215.2(A)(1), then the following would be permitted (to use a common example with small conductors): a 48A continuous load, 55A ampacity conductors, and a 60A breaker. The conductors are sufficient for the load, and the breaker is sufficient for load, and the breaker protects the conductors per 240.4(B). [So to me this should be allowed.] However, because of 215.2(A)(1), this is not permitted, and 60A ampacity conductors are required.
Cheers, Wayne