When using the option of connecting to the grid, when HOMER does its optimization run, it includes the cost of the converter for the grid-only option, even though the load is AC, and thus the converter serves no purpose and should not be included in the cost (i.e. the COE for the grid only case should be the grid rate). Isn’t this right?

HOMER will include the cost of the converter only if the system includes a converter.  If you are forcing in a converter by not including a zero in the “Sizes to Consider” table, then what you are calling the "grid-only" option will include not only the grid but the converter too, and the system cost will include the converter cost.  HOMER lists the components that comprise the system at the top of the Simulation Results window, which appears when you double-click a system in the Optimization Results list.