He's got you on a technicality. Bokeh, strictly speaking, is used to describe the quality of the rendition of those areas outside the region of the image considered in focus, or within the 'depth of field'. Large apertures yield a shorter depth of field, small apertures a larger one. But bokeh is more an artistic term. The regions of the image outside the depth of field can have a harsh appearance (bad bokeh) or a soft, smooth, dreamy appearance (good bokeh).

For the most part, bokeh is related to lens design more than aperture. Aperture only effects bokeh in that, as you said, shooting with a small aperture will increase your depth of field, perhaps to the point that the entire image is in focus, and there will be no area(s) out of focus, and therefore no bokeh.

Shooting in aperture priority mode in and of itself has no effect on bokeh. Shooting with a large aperture decreased depth of field, which increases the out-of-focus area, which means a greater portion of your image will have whichever bokeh the lens you are using renders. But this can be done in virtually any mode by setting a large aperture.

Sounds to me like your Pentax TAV mode is the same as setting my Nikon on auto ISO. Given your film background, I can understand why you're uncomfortable. But when you think about it, is ISO different from the other two points of the exposure triangle? In aperture mode, you set aperture and ISO, and speed varies*. Shutter mode makes shutter and ISO constant, and aperture varies*. With auto ISO, you can shoot manual**, set aperture and speed, and ISO adjusts.

I find it a very useful setting in non-static shooting situations.

*In aperture or shutter priority, used in conjunction with auto ISO, you minimize the possibility of over- or under-exposure or incorrect shutter speed if you exceed your camera or lens limitations.
**Auto ISO can also be used in conjunction with aperture or shutter priority, again, minimizing errors due to equipment limitations.