You must be talking to the wrong FSDO guys.
Your compass quote is a term definition. Not a requirement statement but a good definition nonetheless. There are many defined terms.
The crux is the FAR does not specify a "compass". Only a "magnetic direction indicator". I also cannot find "Stand-Alone" but I do find "Independent". I will assume both are defined.
See
CFR Title 14 part 91.205 (3).
Also see a 2011 Advisory Circular (not regulatory, only advisory) AC 23.1311-1C. Paragraphs 8.7 and 8.8.1 clarify this.
So either a compass, as defined, or any other approved magnetic direction indicator, whether running on whiskey or electric juice, meets the requirements of CFR Tiltle 14 Part 91.205 (3).
The philosophical and duly practical point as to whether the electrons keep tronning or not is well taken and is a personal choice. I for one like having a whiskey compass in addition to a remote magnetometer. However, many times the FAA takes the stance that if a new item is a primary replacement the original item needs to be removed or disabled via inop. Which never made any sense to me. Back on track. With regard to airworthiness, any type of approved magnetic direction indicator by itself complies with Part 91.205(3).
Kent, if you feel more comfortable keeping a traditional compass yet want to relocate it's position I would go for an SIRS Navigator pedestal mount compass and place it on the glareshield. But if you do add a G5 definitely install the GMU 11 and GAD 13 options. It is super nice having slaved heading system and air data calculations like TAS and a wind vector showing your winds on the display along with density altitude and OAT.
Jim