You have non-smokers that see the "smoke" (vapor) and assume that it's due to a cigarette and then immediately complain before even noticing that they aren't actually bothered by it. <snip> Also, again... because it does look like someone is really smoking you might have other smokers seeing this and assuming that it is okay to smoke in that area and light up as well. I think that the "powers that be" just don't want to deal with it.
First, congrats on quitting.
I used to have a part time job in a bar in Dallas. When Dallas passed a law to keep people from smoking in bars, a couple of our regulars started using e-cigs (mini "looks like an analog" style) and the manager of the bar told them that he wouldn't let them use them in the bar. It cost him some customers, too, because they just found another bar that would let them use their e-cigs and started going there.
The two reasons you mentioned were two of his reasons. His third, and I think the one that worried him the most, was explained to me as "I don't like the cops coming into the bar, it looks bad, and once they are here, who knows what happens. I like to give them as few reasons as possible to come in. If someone see's them using their e-cigs and thinks they are smoking, they may complain to the bartender, but they may just call the cops and complain. And if the cops get a complaint, that gives them a reason to come to the bar and start snooping around. And with my luck, just before the cops walk in the door, some smoker will see them using an e-cig and decide "Hey, it's OK to smoke in the bar". He'll light a cig, they'll walk in the door, and I'll get a $250 fine. I don't want to deal with it."
I don't agree with his choice, but he made the rules. Personally, I think he lost a lot of business by not allowing it, as I know for *sure* that several people who had been regulars started going to another bar. He essentially fined himself, since he chased off that business.
The anti-smoking law cut into bar business by 30% or so, not just at that bar, but at most bars in town. A lot of them, like the one I used to work at, are no longer around.
I do keep thinking that someone should take an existing bar, make it vape friendly, and set up a small vape-shop that sells basic equipment and juice in the bar.