It doesn'tseem to be clearly stated that what Oregon will class as an AO as far as it pertains to it means that Hertz also has to go with the same rule

If a police officer was to stop the driver, it could be that no Oregon law is broken, but that the T&Cs of the rental are not being abided by

I do not see anything stating "requires" at https://www.oregonlaws.org/ors/646A.140

If you take the matter to court, it may be that the court would rule that the definition under ORS supercedes that by Hertz

It could be read that the ORS rules cap what a car rental company can automatically class as an AO