Yes, question 1 is: Which reciprocity applies? With Germany or with Syria? Their travel document is issued by Germany, but their citizenship is still Syrian. It's a https://en.wikipedia.org/wiki/Refugee_travel_document
You're right, even if they become a German citizen, they're ineligible for VWP due to being present in Syria on or after March 1, 2011. So they'll have to apply for B2 even with German citizenship.
Also, they're probably going to be denied for formal reasons anyway. Their travel document is not valid for 6 months beyond their intended travel date (Sep 2024), it expires before, in June 2024. Oh well. The interview appointment is already set for Dec 2023, they'll just go there and see. If they get denied, they can just apply again with a German national passport, right? Or will their previous denial be a detriment?