Speaking literally, Ed, or the Ed presented before them, was indeed an orc. Ed as a being however was not an orc. He was a consciousness. The orc was nothing but a husk that the consciousness being Ed inhabited.
Explaining this concept to the orcs in detail would be both complicated and needless. The best of course of action was to omit some details and dumb down lots of explanations.
Fortunately, the smartest, or at least most talented, minds of Sanctuary were the ones elected for the Sanctuary Council. Ed was confident they would still be able to get the gist of things.
"I am not an orc, but I am an orc right now" Ed saw the confusion of the orcs but he continued anyway. They wanted to say something, but the impact of Ed's words had yet to fade. Plus, now he was an orc now...? Either the previous statement was a joke or there was more to see.
The orcs quickly got their answer.