I'm not sure what you are seeing. Teiid doesn't care what the view body is when an instead of trigger is used. It's not clear that the error message even matches the trigger sql.
Yes, the error message never matched the line, nor there was Line #4 in the query. In fact the query was validated fine in the insert and select tab.
based on your comment it must some other lingering cause, which seems to go away with updates to select transformation.