Can this form of reported speech be acceptable?

Don't you find this a little weird?

Present simple tense
Direct speech: “ I live in Germany.”
Reported Speech: "He said I lived in Germany."

But because the reported speech is still true, it is often left in the present simple tense:
• “He told them I live in Germany."

Let's say the original speaker was a man. Then, traditionally, the reported version would be: "He said he lived in Germany." Using "I" instead is ambiguous unless "I live/lived in Germany" appears in quotation marks, as it does here. Is that why the book presents it this way? Otherwise, how am I supposed to know who "I" refers to? Would it still be reported speech?

There are two types of reported speech: direct and indirect. In written form these are distinguished using quotation marks:

Direct:

He said, "I live in Germany."

This reports the literal words he said, and in that context "I" refers to the same speaker as "He".

Indirect:

He said I live in Germany.

This describes what he said rather than repeating the actual words. In this context, "I" refers to the person writing the whole sentence.

When speaking, there are no quotation marks, so the second form can be ambiguous. Often the context will make it clear what was intended. For instance, the discussion may be about where a particular one of the conversants lives, so it wouldn't make sense for them to be saying where someone else lives.

If not, sometimes we'll indicate a direct quotation by saying the words "quote" and "unquote":

He said quote I live in Germany unquote.

And when using indirect reported speech in spoken form, we can add "that" to indicate it's not a quote:

He said that I live in Germany.