Your web host is right. Adding the PHP directive to all html files would cause the web server a lot of unnecessary processing. For every .html file request, Apache will launch PHP to process the file. But most .html files won't have any code in them, but PHP won't know until it finishes reading the file. A more practical example: if your web host only has you as a PHP user and they have 10 html only users, by adding the directive globally means everyone's html files will get processed as PHP instead of just yours. Its not a huge slow down, but a slow down a web host could pretty easily avoid.
You have 2 other options (which don't require mod_rewrite). BUT these two options do require your web host to honor .htaccess files in your local directories.
You could try doing this in .htaccess:
<Files ~ "\.(htm|html)$">
ForceType application/x-httpd-php
</Files>
I haven't tested this. But I do use a modified version to handle a PNG image request and take that request and pawn it off to a PHP script to dynamically generate the image. Here, I just changed the extension to htm/html.
The second approach goes back to the addtype directive you wanted your web host to use. I believe it would look something like this:
AddType application/x-httpd-php html
Just put either one of these on their own lines in .htaccess. Place the .htaccess in your web accessible root. If you do this, then all files/directories off of this directory will follow the same rules. Again, a slight performance hit, but not too bad.
