Conditions A and B create different objective representations. Objective categories are those categories defined by objective properties. Applying these logics to objective representations yields objective rationality. However, in general, a situation can be characterized objectively in more than one way, and not all properties of human representations need be objective, and we rarely know everything relevant to a situation, and some of our objective logics are intractable. These facts do not refute objective reality or objective rationality.
Humans are perfect objectively rational agents.
Human irrationality doesn't refute objective rationality. Objective rationality is a basis for psychology. At first glance, cognitive illusions suggest objective rationality is a very bad basis for psychology. This seems to be Lakoff's main point. It is easy to construct choice experiments to fool humans, showing that we do not reason very well logically or probabilistically, but the fact remains that we do reason logically and probabilistically.