I think ES is confused. This rule is to prevent you using
They Are Coming in the manner it explains in the rulebook; you cannot use
They Are Coming to discard a minion, then play that minion using the effect of
They Are Coming.
Galadriel, Lady of Light cannot exert to play an Elf for free, if, by exerting, you will now have an Elf in your hand. Due to the requirement laid out in the rules, effects playing cards from hand or discard pile require you to play that card if you can.
This is the cost-effect rule.
One misinterpreted section of the rulebook does not change this. You have misread this section
If an action plays a card from your hand (or discard pile) as part of its effect, then that card
must be in your hand (or discard pile) before you can begin to perform that action
to mean that the card must be in your hand in order to pay the cost. This is incorrect.
It means, the card would have to be in your hand before the costs are paid in order to be played.
The cost-effect rule is not changed by this one line. You have misread it.