That's not confusing at all as the on state is white. Also turning it competely off will indeed confuse many people, as there is no difference anymore between standby and no power. Anyway: the standby button has ist own firmware and can't be updated, so no change in functionality in standby mode is possible.
I think this is normal practice for pro equipment, when equipment can only do what it is designed to do. However, on the consumer side, people usually want to have choices. I understand that nothing could be done now to change the behavior of the power light. However, I would also note that DAC is more of a consumer item, which would explain why people are asking for too many features that do not make sense to engineers. My TV has the option to have the light on or off during standby (or when the TV is off), and it does not confuse me I use power conditioner with DAC, so I turn everything off, when I am done. However, the red light could be considered too bright by some people if the room is dark enough.
I agree, that some of consumer requests are indeed baseless, but I think the light is more of matter of preference. That said, I respect everyone's opinion, and especially official opinion. There is always the "wants", the "needs", and then the implementation. I also like that, when possible, you give us a glimpse of the implementation. It makes me think and appreciate what has been done by RME.