One rule is that the bowler cannot bowl from below their waist height
This is not exactly correct; the Law 21.1.2 simply specifies that "Underarm bowling shall not be permitted" and does not attempt to precisely define what is "underarm bowling". This may seem pedantic, but as your question is based on the letter of the Law rather than the spirit, it is important to get these things correct.
since the bending rule only applies when the bowling arm raises above shoulder height
I would disagree with this. Law 21.2 specifies "For a delivery to be fair in respect of the arm the ball must not be thrown."; the second paragraph of 21.2 should be interpreted as one definition of a throw, but not the only one. A bowler doing something like a baseball sidearm/submarine pitch is clearly throwing the ball, and should be no-balled for doing so. I accept that a team could try to make the same argument based on a literal reading of the rules that you are making here, and then appeal to the appropriate governing body if a no-ball were called. At that point, the governing body will tell them to stop being stupid.
The other option available to the umpires in this situation is simply to deem this tactic unfair play, which they are entitled to do via Law 41:
The umpires shall be the sole judges of fair and unfair play. If an umpire considers that any action by a player, not covered in the Laws, is unfair, he/she shall call and signal Dead ball
and if the action is then repeated, award penalty runs to the batting side. That will very quickly stop this tactic.