"1)Since the book doesn't specify the relationship between steps and beats, we can put the steps anywhere in the music - however.."
Yes
"2)All top dancers i've ever seen place their steps on the beat (i'm talking slow waltz, and basic steps like 1-2-3 natural turn, which is what the discussion is about). this would mean that steps start on 1&, 2& If you see a dancer not planting their feet on the beats (for 1-2-3 natural turn) it looks like they're dancing off time"
Because STEPS formally begin and end at when the feet pass (or for a closing step, are halfway closed), the reality is that the planting of the foot is very approximately halfway through each step. If you wish to place that squarely on the downbeats, then you should in fact be counting the actions defined for each step in a way closer to "and one", "and two", "and three".
You may find it preferable to count "one and" but if you do so, you have shifted the step count literally used by the books to specify where in the sequence each action such as rise and fall is supposed to occcur. If you shift the count in this way, you must also shift the specification of each part of the action to its modified count.