Though fly dressing without a vice has only in recent years gone out of use for commercial flies (I believe Rogan's of Donegal were the last firm to stop tying in hand, about 20 years ago) fly tying vices date back to, at least, the late 1700s. As far as I can ascertain that is before the term fly tying came into use. Fly dressing was used for the items produced in those earliest vices. The distinction between dressing in hand or tying in a vice may be useful terminology to use, it would need to be defined as such at the outset. It isn't a commonly held distinction.
Language changes, some of it is an advancement some of it isn't. No one is going to change their usage because of this debate. For me I was "brought up" with the term "Fly Dressing", what gets me about it (and it is the only thing) is that some people seem to think I'm trying to make something of that I am not, and voice strong opinions to that effect. There are many words that I take as commonplace from my childhood which people seem not to understand today. A small passageway between buildings has always been a "ginnel" to me. Then again I was brought up in Lancashire where the accent and dialect are almost another language.
In the end, as I often say "Thy's all gotta learn t' talk proper, like wot a does"!
"Political correctness is a doctrine, fostered by a delusional, illogical
minority, and rabidly promoted by an unscrupulous mainstream media, which
holds forth the proposition that it is entirely possible to pick up a ****
by the clean end"