I'll post my comments here since I've written quite a bit.
It seems like you're mis-matching the scenarios. Consider four scenarios: A1 is "Standing on Earth," A2 is "Standing on the back of the rocket as it accelerates at 9.8 m/s^2," B1 is "Floating in space," B2 is "Free falling in a vacuum." The equivalence principle says A1 is analogous to A2, and it says B1 is analogous to B2. In your post, you seem to compare B1 to A2 and A1 to B2, which are not the analogies.
Now as a follow-up question, you asked,
A question. For the person in free fall, since they are in a not quite symmetric graviational field, since the gravity is slightly stronger below them, their body should be slightly stretched. Which should be different than if they were floating in space. Also, the gravitational field should alter the inertial vectors of their quantum states, as compared to simply floating in space. For these situations to be truly identical, my logic must be wrong. But what is that flaw(s)?
Also, if a person was in free fall above a black hole, they would get spaghetti-fied. What is it about that scenario that breaks it of the analogy with your B1, floating in space?
That's a good observation. I was thinking about including that in my comment, but I ended up leaving it out, because I wasn't sure if it was relevant.
On Earth, you are infinitesimally compressed from the sides (because from a Newtonian framework the force vectors point inward toward the Earth) and additionally you have an uneven strength of gravity at your feet vs your head (for the reasons you point out). This is called the effect of tidal forces.
The way to salvage the equivalence principle is to point out that the equivalence principle holds for vanishingly small regions of spacetime. If you are considering a region of spacetime where tidal forces matter, take a smaller region, and the tidal forces are less noticeable. They're not exactly gone, but a sufficiently small region will make them hard to detect.
Using tidal forces, you can deduce the gravitational field. However, as you "zoom in" into a small region of spacetime, the tidal forces become vanishingly small.
On Earth you know the direct effect of gravity on a box: it falls down. However, trying to measure tidal effect on the box would require extraordinarily precise instrumentation. Near a black hole, a person would be spaghettified, yes, but if you "zoom in" to the region of an electron, this effect would no longer hold as strongly. Simply said, tidal forces depend on gravitational strength and length scale, and you can always zoom in to get a smaller length scale.
The equivalence principle, stated more accurately, talks about the similarity of scenarios B1 and B2 as you zoom in on smaller and smaller regions of spacetime.
As a related note, this point of zooming in on a region of spacetime to "get rid of" tidal forces is analogous to the idea of zooming in on a sphere to "get rid of" curvature effects. When you zoom in on a sphere, it looks more and more like a flat Euclidean plane. The curvature effects are never actually gone, just like how the tidal forces are never actually gone, but they become harder and harder to detect as you zoom in. This is the geometric significance of the equivalence principle: as you zoom in to a region of spacetime, it looks more and more like Minkowski space from special relativity.
In fact, there's a mathematical way to state this: given any geodesic of a free-falling body (i.e. worldline of a free-falling body), there exist coordinates for which the metric tensor $g_{\mu\nu}$ is exactly in the form of the Minkowski metric $\eta_{\mu\nu}$ at every point of the geodesic. At points near the geodesic, $g_{\mu\nu}$ is not exactly $\eta_{\mu\nu}$, but it looks more and more like $\eta_{\mu\nu}$ in the limit as you approach a point of the geodesic. These coordinates are called Fermi normal coordinates.
Regarding the question in your title, I would say that the "technical version of the equivalence principle" is technically correct, but the "intuitive version that people talk about" is technically incorrect. It was always meant to refer to the technical version, but when you explain it intuitively, you have to brush some things under the rug.