Intriguing question. The client wants the project marked as late if it was ever late as a defensive measure against ultimate late delivery. I believe I'm not alone in thinking that this conceals opportunities to intervene and avoid late delivery.
I think that if I were the PM on this project, I would want to satisfy the client's desire for a "defensive dashboard", but also want to communicate the opportunities for intervention. There are a couple of ways to do this, but the one that appeals to me the most would be to adopt @Mark Phillip's suggestion and use EVM. Print the Red Stoplight on the dashboard, but in the center of the red bulb print the current SPI. For me there is a big difference between a red bulb with a 1.01 printed in the center and a red bulb with "1.17" printed in the center. (I might go so far as to print the first in white and the second in yellow; yellow on red should be alarming enough.) (Bonus; you get some Section 508 compliance as well!)
The other truth that I see in the question is that although the client doesn't want to track the revised dates, I would. The dashboard can't be the only project tracking M&C tool. I've got a half dozen tracking charts and tools that I use for my own reference and brief the client only if they're informative. The client may or may not wish to be informed of these - your client seems more interested in allocating blame than in ensuring project success, but that is the client's perogative. Your reputation will be based on whether the project closes successfully.