What is he calling a 'g coupling'?
If, as I suspect, it's a brass compression fitting, it would be susceptable to developing a leak at some future time. I wouldn't use it in an installation that was not easily and frequently seen.

He is proposing a "T" G-coupling which uses neoprene washers to seal its connection to the piping.
These are not supposed to be enclosed within the wall cavity.
Given the era of the houses origination, I suspect that it is on a raised foundation.
If this is the case, I would suggest that a separate supply be installed in the hot water supply line, under the house and brought up for the appliance.

Open the wall, remove some pipe, add some new nipples and a T.

Thank you everyone for their input.
Randy:
Our plumber meantion that the main risk would be a leak and suggested that if we do install a dishwasher by this g-coupling method then we should have an access panel under the sink to monitor for leaks. I look under the sink often because that is where I store my cleaning supplies so would be able to check for leaks frequently. I'll keep the wall open since it's under the sink and no one but me looks there anyway
Snoonyb: unfortunately our house is on slab. The plumber looked into creating a separate line but it would require major cutting of walls, cabinets and tiles. More expensive work than I could afford.
Brickeyee: I hope it's that easy.

My main question is: is g-coupling a dishwasher too risky for a leak even though I'll be able to monitor it? Is this something that is done in the plumbing world?

ANYTHING in a normally-pressurized main water supply that "requires monitoring" for leaks is huge no-no IMHO. Cut the wall, get in there and do it right or don't do it, IMHO. The likelihood of a leak may be low but consequences can be catastrophic, especially on slab where there's no place for the water to go except all over.

"one vertical iron pipe"

He probably means galvanized steel.

While it can be moderately difficult to unscrew old galvanized steel pipes, it can be done.

Every plumber knows to use a second wrench to back up pipe so torque does not go to the wrong threaded joint.

About the worst that happens is a pipe tears off where it enters a female fitting.
Then you can either use an internal pipe wrench or remove more of the line.

A correctly made threaded joint (pipe dope and tight) works just fine.

I would begin by getting a reputable plumber to look at the job;

First off, the only approved method of making connections on iron pipe is by means of NPT (national pipe taper) threaded fittings or in some instances they will allow welding the pipe(providing you have a welder that is certified as a pipe fitter.)

Next, A plumber can be held both civilly & criminally liable for any death, injury or property damage that arises from failure of his/her work.

Now consider this: In order to get a Plumbers License one must undergo a four year apprenticeship where you must work 200 weeks under a master plumber & report your work history to the state apprenticeship board (any week with less than 40hours doesn't count). In addition to working under the master you must also attend an approved college or technical school night school and complete a state mandated carriculum on plumbing. Once you have a diploma from the college or tech school, and a certificate of completion from the state apprenticeship board confirming your hours of service you are then invited to go take the state licensing exam. You then pay anywhere from $250 to $500 non-refundable testing fee and they will schedule you for a time and place to take the exam. You will also be informed that the test is an open book exam and you are required to bring a list of reference books that generally cost another $600.

Any reputable plumber will examine a job and figure out a "code approved" solution. In this case, if the pipe in question is an iron pipe and not accessible without major demolition they may locate another source for the water line to the dishwasher, but I can assure you, no reputable plumber is going to risk loosing his/her license and serious property liability problems merely to save the homeowner a few bucks.

The fact that he is telling you that you will need an access panel so you can keep an eye on the work is a dead giveaway that this fool is not a reputable plumber and I don't care how many years he/she may have been in the business. We simply don't need that type of ppl making it look bad for real plumbers.

Sounds like I should talk to another plumber for a safer solution. Will do. I hope he'll be able to come up with a code-approved method otherwise I suppose I'll be hand-washing dishes for a while :) Thanks for all your help! Leigh

Another alternative is to open the wall from the other side, which should allow for more freedom of access than preforming the alteration inside the sink cabinet.
Piping in the configuration in your dwelling are supported by being strapped to blocking and verticle wood members, which add an additional repair configuration.
A quality repair will appear as seamless.