I think the 10T regs are silent on this.  There is a clause in the 8T regs (related to other types of interest--so NOT exactly on point):

To the extent the proceeds of a debt (the “ancillary debt”) are used to pay borrowing costs (other than interest) with respect to another debt (the “primary debt”), the ancillary debt is allocated in the same manner as the primary debt is allocated from time to time.

Most of the closing costs I see are not loan related and there are often "lender credits" and/or "broker credits" which wipe out the loan related costs anyway.

But I certainly wouldn't fault you for just doing what the Pub says.  If they're just financing closing costs and not taking other cash out then the problem goes away in a year to 18 months.  If they're paying off a car loan or credit card debt then I'm definitely throwing everything into a spreadsheet and grinding the numbers out.