That section is defining what the consumer can and can't do, not what the supplier can (or can't). That part is also conditional: "A consumer who has the right to a price reduction and the final right to reject may...", so what about a consumer who doesn't have the right to a price reduction, and what has triggered this right to the price reduction?
I think you are also assuming that the right to require replacement or repair is exclusionary. To take it to extremes for effect, if the supplier offered to give him £1m and 20 virgins instead of replacing or repairing the part-empty Biro, your take is that that's not on. Would a court tell the supplier not to fart around with all that money and just give him a new pen? And, BTW, pay the £40 fees on your way out too...
Finally, at least briefly, "...and without significant inconvenience to the consumer." I would suggest that a refund is actually a better solution for the consumer since it means he can obtain the services of a different, hopefully better, supplier and/or product. Certainly, I don't see a full refund as significantly inconvenient (particularly compared to, say, a repair).