"Not to mention we have the same cars, and I had the exact same problem 5 months ago when I forgot to reinstall the sensor...."
Erm... you can't have had the same problem - I have it on good authority, i.e. yours, that your car doesn't have a brake pad warning light - remember "The only warning lights on an E34 is the airbag light, and inspection/oil change lights."?
Because warning lights often come on intermittently - e.g. a bad connection might knock out a sensor which would then not sense a problem - it isn't at all implausible that BMW might have a warning light that needs to be reset so that you investigate the problem even if it's intermittent. Whether it's true or not though is another matter, and the fact the a BMW dealer says it is doesn't necessarily confirm that it is - I once rang a BMW dealer about a problem on my previous BMer and got a load of totally made-up trollocks about infra-red computer signals controlling the shocks blablabla - the guy was having me on big time, I tried not to laugh (though ultimately the joke was on me cos it was on my phone bill and he wasn't being any help)... anyway the long and short is that advice being "from the horse's mouth" isn't necessarily any use.
About the key being in position 2 while you're driving, yes of course it is, but it doesn't follow that there's no difference between position 2 before you've fired the engine and after. The service lights that count down to "inspection" go off once you crank the engine, and stay off when the key goes back to position 2 !!! Like I said, it must be voodoo.
I'm going to take off a sensor so the warning light comes on, then stick it back on, and see if it goes out. If it goes out without any "resetting", I'll genuflect to your hallowed memory for the rest of my life. ...well, until the weekend anyway...