You are missing the whole point of 119. It deals strictly with 121, 125 and 135 operations.
No it doesn't. 119.1(a)(1) states it applies to commercial operators. If you're doing sightseeing flights, you are operating as a commercial operator, but since it's listed as one of those exceptions, you don't need a 135 certificate to conduct sightseeing flights. When you operate a ferry flight, you are acting as a commercial operator, but since it's listed as an exception, you don't need a 135 certificate do ferry flights. When you are conducting crop dusting operations, you are operating as a commercial operator, but since crop dusting is listed as an exception, you don't need a 135 certificate to conduct crop dusting operations.When you are conducting cargo hauling operations, you are acting as a commercial operator, but since it's NOT listed as an exception, you must have a 135 certificate in order to conduct cargo hauling operations.
When you are a commercial pilot, getting paid to do instruction, you are operating as a commercial operator. But since "flight training" is listed as one of those exceptions, you don't need a 135 certificate to conduct flight training operations. Therefore, you can get paid to do flight instruction as a commercial pilot acting as a commercial operator without needing a 135 certificate.
There are two ways to look at the generic situation of a person getting paid to give instruction to another person in an airplane:
1) A certified flight instructor getting paid to give instruction as a CFI. He does not need a medical at all to operate this way, but he does need his CFI certificate on him at the time, since he is envoking a privilege of his CFI certificate in order to get paid. This is how many people seem to think is the only way that an instructor can conduct instruction. I'm by no means saying this is false, I'm just saying there is another way. That other way is:
2) A commercial pilot getting paid to give instruction as a commercial operator. He must have a 2nd class medical to operate this way, or he can't get paid. 119.1(e) lists "flight instruction" as an operation you can do legally without needing a 135 certificate.
The rule that lets you get paid to be a CFI without a medical does not necessarily mean that the ONLY way to get paid as an instructor is under that condition. If you don't have a medical certificate, the only way you can legally get paid is #1. If you have a 2nd class medical, then you can either get paid according to #1 or #2.
Also, I truly have no idea where you are getting the idea that part 119 only applies to 135, 121 or 125 certificate holders... Verbatim from page 1-3 of the Commercial Oral Exam Guide published by ASA:
As a commercial pilot certain operations are allowed without being in possession of an "Operating Certificate". Examples of such operations are: student instruction, certain non-stop sightseeing flights, ferry or training flights [...]
Sounds like to me it doesn't just apply to part 135, 121, or 125 operators...
Hmm. No exceptions?
Looks like an exception to me.
Now you're just being argumentative for the sake of being argumentative.