I certainly recall that point, which was the subject of many discussions... I just never interpreted it in the sense as expressed in that paper!
Their clarification ("assign a property to a system (e.g. the position of an electron)") plus your explanation allows me to make sense of Neumaier's claim (which he did not prove and with which you probably disagree). He holds that:
"all proofs of Bell type results [..] become invalid when particles have a temporal and spatial extension, with an internal structure that is modified when interacting in a beam splitter."
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http://arnold-neumaier.at/ms/lightslides.pdf
So, he suggests that that is why Bell's inequalities are violated.