Put it another way: do you think Michael would have stood by and not interfered if Harry was torturing an innocent child, just because he didn't have the right to judge Harry? I don't. Therefore, his reaction to Cassius' torture clearly indicated an exception to the rule based on circumstances.
He wouldn't stand by, but Cassius isn't an innocent child, and he did try to talk Harry out of further action and he and Sanya walked away before what went down, went down... Michael still would not presume to judge Harry even if he did beat up an innocent child.
In the same way, I am arguing, Michael normally would not lie, especially not about something important, but might reasonably make an exception to protect Harry's soul from Lasciel.
That would have no effect on protecting Harry's soul from Lasciel, I'd argue the opposite..
I don't think Michael objected for form sake, if he did, he'd be rejected really quick as a Holy Knight..
It would be nice if it were all black and white, but it isn't, and as Michael would say, "the Lord works in mysterious ways.." In other words because of his personal beliefs and the rules governing his role as a Holy Knight, Michael cannot do more than he did, fight Cassius until he was either killed, got away, or surrendered his coin. Cassius chose the last, under the rules of being a Holy Knight Michael did his job, enabled Cassius to seek or not seek redemption with what is left of his life... At the same time Michael is very aware of the mockery of the surrender, that Cassius was trying to survive not seek redemption... He was also very aware that Cassius had knowledge that could save thousands... But he could do nothing about it but walk away, not because he was okay with Harry wacking Cassius in any way, and he voiced that... However as Harry pointed out to the then smug Cassius, he isn't under any of the constraints that Michael and Sanya were, so he proceeded.. Which
Michael was okay with because it isn't his place to judge Harry, because Harry doesn't have to play under the same rules that he does, and the information he got could save lives... When he and Sanya walked away they left it in the hands of the Almighty and Harry in this case was His tool... If they saw some humor in the bit about the quarter has nothing to do with it.