I don't see how it can cause a problem. Even if that person was charged and ended up in court, if the verdict was one of innocence how could they be punished for being proven innocent ?
I stand corrected so, but I know that the reports recieved back from the Garda Vetting Unit do not include arrests or soft information, and would imagine the same information is provided for the Australian Embassy as for people working with children here.
The cert issued to an individual for the purpose the OP mentioned is different to that issued to an employer. These certs state that they should not be used for employment purposes.
You should simply request it. It isn't an issue of a garda clerance being refused, it's whether the Australian government will be happy to allow the person into the country based on the information on the cert. From what you posted there doesn't look like there is an issue.
I needed something I think was called a certificate of no convictions for a visa in the past. I think that's all the Garda can do. It doesn't sound in keeping with the principle of innocent until proven guilty and laws against slander etc for the Guards or indeed anyone else to start throwing around accusations based upon something unproven. People can be arrested based upon mistaken identity etc. It would not be fair for someone to have a criminal record when to all intents and purposes they are innocent of any crimes.