i understand what your saying. but they are right. try it for yourself. head down the tyre shop with an 8inch and a 9inch rim and have 2 identicle tyres fitted and inflate them to the exact same pressure then messure the circumference. there will definately be a difference. it wont be much (0-5mm), but they will be different. you answered it yourself when u said:
"the sidewal is designed to flex and distort. its normal for a tyre to do that (within reason) but when you stretch them, youre not allowing much movement. thus the tyre is 'firmer' and doesnt allow it to..... squirm?"
the stretched tyre is under tesion and cant balloon out where as the unstretched tyre will. thus changing the circumference