I don't get the issue here....if the student is sincere, respectful and committed (which in the OP's case, the student may be too new to tell...) then why not have him show respect via another gesture? That would speak to the spirit of the bow. Maybe a big smile would suffice in the meantime.
A big smile?? You have to be kidding.
I donīt understand the issue either -- if he doesnt want to follow Japanese etiquette, why doesnt he go to kickboxing or something.
And no, it is not only a personal issue. If the teacher allows this, he has changed the dynamic from "this is what we do" to "this is optional". Not the same at all.