Hi Eion,
Hmmm, not sure. I don't think it can be recycled. The aluminium content is probably so small that it does not make ecological and economical sense. Roman Jaques from BRANZ probably knows for sure.
I did a bit of research on the EECA website but did not come up with any clear answers why it needs to be removed. I do believe that it has something to do with moisture issues. You are correct that the foil is on the warm side of the bulk insulation. That means condensation should normally not be an issue.
The difference to the status quo is that there is no air gap between the foil and the underside of the floor. So that means that any moisture could not evaporate as easily, in particular if you have point sources of moisture (a dripping pipe, a spilled bucket of water, etc.)
Sorry, am not of a lot of help here
Cheers
Albrecht