yea that doesn't make any sense at all. You think a check engine light is so the man can watch you? Personally I want to know if there is something wrong with my engine.. As far as smog goes it doesn't matter since they hook it up anyway and if you had a check engine light on they would know - but a light on doesn't mean you don't pass.
That's like saying you can make a steering arm out of foam and paint it gray to look like steel. Why not just do it right?
The point is he is trying to rush it so he can get it going...then do it right. The inspector will turn the key and check to make sure the light turns on then off once the engine is running, hooking it to the oil light will accomplish that. Yes when he gets the new dash in he is going to do everything right, because he does want to know when there is something wrong with his engine