I read through the doc you linked - it was very useful, thanks. But it seemed to say pretty clearly that if Jimbo asked to be taken to the 7-11 to change his note, he should have been taken there (and pay for the extra 30m or whatever) so I don't think you can say the cabbie was in the right because he clearly was not.
I had a similar problem with a cabbie a few years back arriving back in Hk after an overseas trip. I had no HK money on me and drew out at the airport - getting 500 bills (as you do, from many ATMs!). The fare was about 250 and it seemed incredibly unreasonable not to give change from 500 for such a large fare, particularly from the airport. How many overseas visitors have been caught out like that, do you wonder? It would seem that a better rule would be no 500 notes for fares under 100, but not a blanket ban. Or perhaps exceptions for the airport. In any event, the rules are pretty bizarre. If you carry legal tender, you expect to be able to pay with it!