I'm pretty sure that's a defect. A pothole big enough to damage the wires in the sidewall to the point where they bulge should also cause a fair bit of damage to the outside of the tire in a much larger area than you're seeing.
If you're driving along, hit a pothole, and it deforms the sidewall enough to break the wires, there should also be some scrapes/etc ahead of and behind the bulge given how fast you would have to be going to cause that damage. It can come from hitting a curb too, but like you said you would also see damage to the wheel.
This pdf has a good example of separation causing sidewall issues under "Damage Induced Sidewall Separation".
http://www.euroratas.lt/galery/_eur...cija/radial_tire_conditins_analysis_guide.pdf
If the tire is newer, I'd also use that to push it being a defect. You can reference this tirerack article.
https://www.tirerack.com/tires/tiretech/techpage.jsp?techid=159
If they still won't budge, and you still want to push it being a defect, have the tire replaced and make sure they give the old one back to you. Do not leave until you have it. When you do have it, check the inside, if there's no obvious damage/distortion there, that's just one more piece supporting a defect.
If they still won't budge, cut the sidewall open along that side. If there's no evidence of damage to the interior layers of the tire or the wire spacing is off, that again points to a defect. If they still won't budge after all this, you'll only be able to resolve it by either contacting corporate or by contacting the manufacturer to ask them if the damage is representative of hitting something like a pothole at high speed.
If you do find damage on the inside of the tire, it probably was a pothole. If the department of transportation lets you file claims for damage caused by unrepaired problems with the road, ask the shop if they can pull the logs and get you info on where the damage likely occured.