I know a lot of DOS people used the term "extended ASCII" to mean specific 8-bit encodings whose first 7 bits were ASCII, but what "extended ASCII" meant depended quite a lot on the context. I came from a different background and it was very clear to me that ASCII was a 7 bit encoding that was almost always stored in an 8 bit byte (I can only think of a few instances in my whole life where I saw bitstreams of ASCII). So that last bit you could do whatever you wanted with.

Having said that, I clearly remember arguing with people that encodings with the eighth bit set were not part of ASCII. As you say, there were many people who didn't understand. My guess is that the GP never interacted with those people. Especially if you were around pre-DOS I think it would be easy to do.