"Cleared Straight-In Runway X; Report Y Miles Final"

Hi, all. Ran into this one flying back from KOSH a couple weeks ago:

I check in with the KPRC controller "20 Miles NE" of Love Field in Prescott,
AZ. She clears me with "Cleared Straight-in Runway 21L, Report 5 miles
final."

I fly directly towards the numbers. My heading was approximately 240
(hence, I'm ~30 deg off of the extended centerline).

At 5 miles from the airport (still offset from the centerline), I report "5
mile final." She questions my position and gets all snippy (indeed, darn
right rude) that I am "not on final" since I am not on the extended
centerline. She patronizingly cautions me to be "careful about this."

Hence, the question is "What does 'Cleared Straight-in; Report X miles
Final" really mean?" Is it. . . .

(1) You must fly directly from your current position to a point on the
extended centerline that is X miles from the numbers, and then report
(sounds like a base to me).

or

(2) You can fly directly from your current position to the numbers (thus
"straight-in"), and report when you are X miles away.

I obviously vote for #2, but the controller clearly thought otherwise (it
seems to me that if 30 deg = "straight-in" in the IFR domain, it ought to
work well enough for VFR situations). Regardless, it is potentially
dangerous when controllers and pilots define things differently. Which
definition is right?

Regards, Jim