It says if you do not pay by credit card, we want your photo ID, or at least it's ambiguous.
Again, it's unclear under whose name the account really was registered, but if he went through the trouble of sending in photo ID, Kapeli would probably mention that as to further exonerate him of any mistakes.
They're be asking for photo id of the actual account holder, i.e. the relative, in lieu of id via CC account. And given that Apple was willing to reinstate his account, Kapeli is already exonerated.
Apple was willing to reinstate the account only under the condition that Kapeli admits there was a mistake on his part, so clearly that doesn't exonerate him from having signed up for an account for a third party under his identity. This is Apple's position and I would expect they have designed their terms so that this position holds up.
Again, it's unclear under whose name the account really was registered, but if he went through the trouble of sending in photo ID, Kapeli would probably mention that as to further exonerate him of any mistakes.