Unless there some special arrangement on your design, the effective and largest pressure area of any o-ring seal is its outside diameter.
I assume that the "lower operating flowing pressure" that your associate is referring to is the fact that by Bernoulli's law the a portion of the zero flow total pressure is converted into the kinetic energy of the flowing fluid or gas; however, this reduction in static pressure due to flow is never taken into consideration in calculating the required design of any pressure containing pie, tube, fitting, etc.