I saw the same thing, and the markings on the pipe are certainly confusing.
In one place it says NSF-PW which clearly means suitable for potable water, but it also says DWV which should not be used for pw applications.
* * * * *
I would ask the local building inspector. The contractor is not going to want to replace that line unless the inspector tell him he has to.
OTOH, I would not pay for anything until the water line is fixed properly.
* * * * * *
Another thing to think about is what have temperatures been lately, and is the pipe buried deep enough. PVC pipe must be derated for temperature and the derating is very substantial.
PVC Pipe | Schedule 4� & 8� Temperature Derating
If the pipe is near the surface, and in the sun, reaching 120 to 140 F is entirely possible with no water flow.