The last application of this nature I made, the applicant had tried to extend her student visa but the Home Office had refused to accept the application (she went on the same day service) on the grounds of funds. She has a 12 month contract for a part time job with Transport for London, working fewer than 20 hours per week, more during vacations, and she has been in the job for six months already. I made her fresh application, insisting that they must take her job and (extremely good) salary into account when assessing her application, and they did, and the application was approved. The instutution were never involved.
Although I see where you are coming from, this is one of those occasions where the Home Office like to pretend that their interpretation of a law is the one which holds firm, wheras actually judges have overruled them in the past and it is the judges decision which is paramount. Section 3.17.14 of the IDI suggests that such earnings will not be taken into account, but reading it carefully it does not say that they will not be - it only rules out taking into account potential earnings for those applying for leave to enter.
Having said that, if an applicant were without any funds from elsewhere, I would certainly be reluctant to rely on the Home Office using their discretion in this way, so it is a good idea to continue to recommend they have funding from elsewhere.
Vicky