I don't like it when they are grouted down, as the grout usually cracks in at least one spot when I pull them. But it is better than thinset or that awful acrylic caulk that sets up hard and sticks like liquid nails.
The tile guy is a total wuss who just wanted an excuse to not do the job; worst case the toilet gets chipped, so buy another one.
I don't know why they (the tile guys) can't just do a nice job of floating the tile and leave a flat spot for the toilet. We're talking about maybe 6 tiles that have to be just right out of the whole floor; how tough is that? I see floors where there are 3/8" differnces in tile height where the toilet has to sit. I don't do tile and even I can do better than this.
And while I'm ranting pull up the old crap first so the flange is at the right height, and rip out the drywall behind and replace it instead of just screwing a new sheet over it so I can fit the lid on, you lazy crap remodel doing losers.