It's the DOJ's position.
Barr acknowledged as much when he came back and invoked the President in his second letter.
Not supporting the Attorney General would demonstrate the President had no confidence in the AG, and would completely undermine his authority to run the Department of Justice.
Of course, and the President can use the AG as his messenger to do the firing.
Barr didn't invoke the President's authority in his first letter so Berman said, sorry, but since I was appointed by the court the law says I'm in office until my replacement's confirmed.
Now, that's at odds with the President's presumed right to fire anyone in the Executive branch and Berman would have probably lost in court, but he could have dragged it out for quite a while.
As it is he got his preferred replacement and poked his finger in Barr's eye at the same time.
The word 'may' in this regulation is not trivial. It clearly does not preclude ending the vacancy when the president appoints a replacement even if that replacement is temporary. Even if Berman contested this, the president could always name Barr, who has already been approved by congress, to be the temporary replacement. In the meantime, Berman's passwords and the lock on his office door could be changed at Barr's directions. Berman obviously knew all of this, and gave up.