The PDF specification defines list structure in section 14.8.4.3.3 (List Elements). The structure types for lists in PDF documents are: L - the List tag, which contains one or more LI tags. LI - the List Item tag. List item tags can contain Lbl and LBody tags. Lbl - the list item label. Contains distinguishing information such as a item number or bullet character. LBody - the list item body. Contains list item content, or in the case of a nested list, it may contain additional List tag trees. Source: https://www.w3.org/TR/WCAG20-TECHS/PDF21.html
I have contacted the authors of PAVE for their opinion.
The WCAG advice relates to lists, not footnotes.
The name of the Acrobat accessibility checker option "Lbl and LBody must be children of LI" contradicts PDF32000-1:2008 Table 338, which states that Note and BibEntry structure elements may have Lbl as a child (so not only LI). The spec says very little about Reference elements, though, so whether Lbl as a child of Reference is allowed or disallowed is unclear. We may well drop the Lbl under Reference as it (likely) has no effect with current ATs.