We were discussing this over on Discord, but to sum up my thoughts:
I thought the entire point of the word "instead" was very clear in the rules that it is a replacement effect (which goes before other effects) and essentially makes that first effect never actually have happened. So with henry, that illegal hand gets replaced, and can't be responded to in any way because it may as well have never actually happened.
Are we going to add the word "would" on all replacement effects now? Because if not, isn't that more confusing with all other cards that use the word 'instead'? If Henry has it, and others don't, I see more room for confusion.
Instead, I think answering the Henry Moran question should just reference the timing/replacement rules, with a quick and helpful summary of "The word instead is a replacement effect, and changes the original effect so that for all intents and purposes never happened, and can never be responded to. Replacement effects happen before other types of effects, so cards like Philip Swinford (who is NOT a replacement effect, therefore goes AFTER Henry) never have the chance to react, because that original illegal hand never happened."
Once you have that knowledge of how the word 'instead' works, you can apply it to all other cards and hopefully have clearer rules knowledge and less rules questions