just because aromatase activity happens in adipose tissue that does not mean that someone with a higher BF will automatically increase aromatase activity. it is the case that it may happen but it may not happen as well. this is the case at any BF%
running an AI as a precaution would prevent this from happening.
increased water retention is from high estrogen, not from high BF%. the AI will prevent this. additionally water retention can be controlled with a proper diet. this is the part where everyone is going to say well he is 20% so his diet is obviously not good. there are many studies coming out recently showing how obesity is related to low Igf-1 and low testosterone levels, maybe he has an issue there that is inhibiting him from getting him to where he wants to be without losing all the muscle he earned on his first 2 cycles.
this brings me to my next point, everyone wants to say that T does not burn fat. well that couldnt be further from the truth. recent studies have shown that proper T levels reduce visceral fat and reduce the risk of cardio vascular events.
if we are going to assume that since he has a high BF% he will aromatise more why cant we assume that his T levels are low since he has a higher BF%??????
my point is it really doesnt matter what BF% you are, when taking an aromatising compound there is a good chance your aromatase activity will increase.
Experience: I have cycled at 20% bf with no AI without issues, guess im just lucky. conversly my buddy is 9% and can not even touch T without letro.
the following is a study done on normal men that had never taken AAS. do you think they were all under 20%???
http://ajpendo.physiology.org/content/281/6/E1172.full
IMO trying to scare someone with a higher BF% out of cycling is fine. but not for the reasons you listed cause they can be easily remedied.