Thanks everyone for the insight. Just to be clear I would be looking to charge for this flight instruction.

When she spoke on the phone she did elude to the fact that it was kind of FSDO discretion. You can't really blame those guys for being heaitanf thought. If they approve a LODA for some guy to instruct in his E-AB and then they end up crashing during training and somebody is hurt or killed, the NTSB is going to ask that FAA official why the approved the LODA and they better have something to fall back on.

My thoughts are this: make my plane an E-LSA because those have more documentation behind them than an E-AB. You have annuals and I will get the 16 hour cert so at least I have some small degree of documented training. That way they can take comfort in the fact that if something happens they are covered to a degree. I always try to myself in their shoes.