And I, respectfully, disagree with you. The hardship basis of $10K doesn't change when the loan is issued. So, they are eligible for a $10K hardship to the extent that amount is still available in the deferral source. So, since $6,000 is all that is left, then they can take that in the form of a hardship.
Good Luck!
Agree with E and I think the wording, albeit a little vague/confusing, was saying that only for hardship were gains excluded, at least that's how I interpreted.