This is a different issue from the one you ran into which is packages exceeding 1 cubic foot shipping via Priority Mail to zones 5, 6, 7, 8 now go by dim weight or actual weight, whichever is greater (and it's often going to be dim weight).
Here is some more info on this.
http://pe.usps.com/RateCase2007/QSG_HTML/Q120.htm
Actually, it sounds like you were being told about what qualifies as machinable for discount parcels. And I don't think this applies to Priority Mail at all.