... If a vote is discounted like in your example, there is a chance that there can be a vote where neither option after the IRV has a majority (Majority being at least 5 votes for the current council), which either means Deck tiebreaker, or a re-vote. The council should be as efficient as possible, & by continuing to keep this system around, then it will be inevitable that one of these situations will pop up & people will probably be complaining. It does not matter if you "do not care" what happens next. If you are on the council, you are expected to read all the options closely, & you are expected to care about what happens with each issue by considering each option.In IRV, not listing all options indicates that you don't care about the choices afterwards. When all the listed options get voted down, it's true that their vote no longer counts; however, this isn't an issue at all because they've already indicated they don't care what happens with the voting result at that point.
For example, if you're voting on an activity to pursue and your choices are "torture," "death," "eating," and "sleeping," your ballot may look like "eating > sleeping." If both eating and sleeping are knocked out of the poll, you don't care about whether you should be tortured or die. Is there an issue with this? I don't see one.
Think of this as a pre-emptive fix, a fix so we do not have people complaining in the future when for example, everyone in an IRV poll votes for one option only, & no majority is reached.