Should all charred wood be replaced in a home fire restoration?
You would need to have an independent inspector (someone who does not do fire renovation) come out and look at it. If the wood is solid, then the insurance company did indeed go above and beyond by painting it with the "paint" product to seal in the smoke smell and the potential carcinogens. Really, if there was no true structural damage, wood didn't need to be replaced. 

Disclaimer: I'm just some guy on the internet. Consult a qualified professional or your lawyer. I am neither.