They can live wherever. See JDiver's response above.

The original question was that Bob is flying with Sally's miles, so taxes etc are supposed to be paid with Sally'd cc, but what happens if they were paid with Bob's cc? The answer is, nothing. Either the agent won't accept the card in the first place, or if the card is accepted for payment, nobody will bother about it later.

Here AA's primary interest is that miles should not be used without the account holder's consent. They essentially take care of this by emailing the account holder that an award was issued from their account.

Frankly, the only trouble-making scenarios are:

(1) Sally calls AA and says, "What is this, I didn't book any award".
(2) Bob tells some AAgent, "I got this great $500 ticket for mere $200".
(3) Bob and Sally are mere eBay/CL friends and one of them, or someone they dealt with, comes under AA's scanner for buying / selling miles.

Normal people under normal situations can just relax. There is no need for first names, middle names, last names, phone numbers, addresses, email, ISPs, genders or AAA memberships to match or differ. You don't have to prove marriage or any other relationship or that you shop in the same stores. You can use the miles in your account to issue an award gift to anyone.