Personally I don't know why you are feeling like a 'criminal'. Your question was answered and options given in a straightforward manner. No one's upset or accusatory. There are facts that most people are not aware of when they go looking for alternative bakers...and one issue is legalities!
The bride has every right to buy wherever she wants and from whomever she wants...she just needs to be aware of a few things. One, that if you buy from a baker that is not 'legal', you can be putting them and yourselves in a situation that could turn ugly...not saying it will! There's a 99.9 percent chance things will be great... but unless they produce a product from a commercial kitchen, you--and they-- are taking risks. If someone gets sick...well, you know our litigious society these days.
Another thing to consider is if the venue will accept a cake from an unlicensed bakery. Some don't. The bride needs to check that out first.
And you are the one that mentioned the overhead being less as a possible reason to pursue other avenues. I merely pointed out the fact that the overhead can sometimes be more in a home bakery situation as most have to buy retail not wholesale. And that talent should be compensated just as if it were in a large bakery.
These are merely the facts...ones I know you weren't even considering. And maybe they sound harsh, but it's certainly not meant to be. Confusing and frustrating sometimes, yes, but not harsh!
You also have to understand that there is a lot of frustration on here among bakers of all kinds with customers who want an Ace of Cakes extravaganza but want to pay a Walmart price. If the bride is on a budget, then she needs to think budget cake...which can be done with a simple design and less expensive ingredients. It doesn't have to look or taste cheap, but she needs to know that if she's looking for a 5-tier topsy turvy cake with sugar flowers, it's probably not going to happen for a budget price--even in a home kitchen. (I'm just using that as an example...I don't know what your bride is looking for).
So, that's all. No firestorm. Just some things for you to consider. You're a good friend to pursue all the options out there. Now you're even more informed! Whether you wanted to be or not!