Is there any good argument in favor of it, or any other house style quirks for that matter, other than in-group signaling?
Non-native speakers might see something like "nave" instead of "nigh-eve" unless it is clear that there is a stress that breaks out of the diphthong.
I don't think style guides are (usually) about absolute correctness, but relative correctness. A question is asked, a decision needs making, someone makes it, and now a team of individuals can speak with a consistent voice because there's a guideline to minimize variation.
Join me in double-dash em proximates. Shows you manually typed it out with total disregard token count and technical correctness.
I was going to say that I respect it, but find it utterly absurd that they do that. But your comment made me look it up again—I had no idea it was just obsolete/archaïc (except in the New Yorker), I'd thought it was a language feature their 'style' guide had invented.
Fun fact: if you have the audacity to correctly write an SMS, you can fit about 70 characters in an SMS. It converts the whole message into multibyte instead of only adding dots to the one character. Or if you use classic spelling for naïve in English, same issue. (We don't dots-ize that in Dutch because ai is not a single sound like ee is, so there's no confusion possible. This is purely English.) I believe in Hanlon's razor so it's probably a coincidence that whoever cooked up this terrible encoding scheme made carriers a lot of money, but I do wonder if this had anything to do with the bug still existing to this day!