The current NEC says it is wrong. Whether anyone wants to update an unsafe condition is up to them, my job stops at pointing it out.
Would you report it as not meeting the current code, as a recommended upgrade or both?
It does not say that at all. You need to read Article 90.
The NEC also says that an existing 3 wire feeder can continue to be used. It simply says any new installations need to be 4 wires. It does not call for replacement.
Good point, the NEC explicitly permits the 3 wire feeder to remain.