Yeah, no, pretty sure they just didn't test on/optimise for Arc. The underpaid support rep probably looked at "Intel GPU" and thought it was an integrated GPU of some kind. Maybe they just looked at "770" and came to the conclusion that 770 is lower than 1070 or 5700 and must therefore be too poor to run the game.
However, since Intel's updates apparently made the game run, it's possible that the problem lies with Intel in this case. Their drivers aren't exactly the most reliable part of the equation and corrupted textures sounds like a low-level issue with Intel's implementation.
I'm sure it'll run fine once Intel updated their drivers. Maybe they should do what AMD did, and send over a bunch of programmers to make the game run well on Intel and give it XeSS without mods.