He's still breaching the #ad guidelines.
The labelling needs to be upfront and obvious, for people to see before they click/engage. The first (and often only) thing most people will see is the video, not the caption. So it must be labelled prominently on the reel's cover image.
Nobody can tell upfront which of his reels are ads.
(As an aside, if instagram story highlights are supposed to be the "shop window" to the rest of your account, his offering is four or more years past its sell-by date and of little relevance... sounds about right
).