I also do not think that they are allowed to use him. Much lesser known characters than Superman are not allowed to be used on Arrow. It wouldn't make sense if they were allowed to use Superman, yet much lesser know characters like Deashot and Harley Quinn cannot be used. Personally, I think it is best if they do not mention Superman much on this show. If they keep coming up with excuses for why he cannot show up, eventually it will get ridiculous. Superman has his own life and problems to deal with.
In the end, I hope that Supergirl becomes this universes greatest hero, the same way that Green Arrow and The Flash are their universes greatest heroes. Batman and Superman can be the greatest heroes in the movies. I like Batman and Superman more than Green Arrow, The Flash and Supergirl, but I do not want them to keep being mentioned. Them being in movies is more than enough for me.