I think one of the main parts of the problem is that many LLs make a decision about their Ts without actually speaking to the person. Is this how anyone would decide to give someone a job? Imagine if someone posted asking whether to give someone a job based solely on the fact that they have or didn't have a degree from XYZ - it simply isn't enough information to go on - you have to speak to someone on a human level. Tenants are people; from all walks of life and with all manner of abilities and disabilities. Unless you have proof of their actual dishonesty then why be so suspicious and cynical? Based on the fact that someone else somewhere once did something bad?!
People from any background can easily lose jobs or have accidents leaving them unable to work. Some working or professinal tenants do not pay their rent or care for the properties.
So of course there is no reason not to rent to someone just becasue they receive DLA/PIP and/or Housing Benefit. And it is illegal - and immoral - to discriminate based solely on this. They may be working or not working. They may want a bigger house becasue it will improve their condition and help them get into work. Thye may never be able to work - imagine how frightening and disempowering that may feel?
That tenant's brief email should not be used as an application to a LL and it was unfair and lazy of the agent to forward it to you in that manner. It was merely an enquiry to see if they would be rejected at the first step.
Also bear in mind that having to disclose details of your disability and justify your inabilities can be invasive and humiliating especially when you fear that you will be rejected for housing based upon them. I would be questioning the competence and motivation of your agent for this kind of behaviour - are they really putting in the necessary effort to find you the right tenant?
Why not ask to meet the prospective tenant and talk to them about their life and their position? Find out of they have a current LL reference, find out if the LL/ agent before that will give them a reference. Ask if they have a character reference. Take some time to get to know the person. Sensitively.
Housing Benefit (not DLA/ PIP) can be paid directly to the LL and this is often used purely as a way of reassuring LLs that they will receive the rent money. It may have nothing at all to do with the T's ability to manage money. And, even if the person themselves has some difficulty, it should not be assumed that they don't have anyone who can help them with this. They might have help from a partner, friend, family member, or a support worker.
It is true that some insurance companies wont cover rent guarantee on HB tenants if they are not working, but last time I enquired about this with various companies, this restriction does not apply to people with disabilities. If your company does have this restriction you can change your company. Unlike a person with a disability, you can choose not to be constrained in that way.
Above all, remember that you are both lucky enough to not be disabled yourself (otherwise surely you would have at least some awareness or understanding of DLA/PIP - and suerly you wouldn't have to ask!) and to have one more house than you need.
This puts you in the privileged position of being able to determine the course of another person's life at the most basic level - where they live and sleep and whether they are safe. There are many, many people out there who are literally homeless and/or living in crap and dehumanising conditions, and in properties where their health or disability is made worse by where they live. Yes, the government needs to do more regarding council housing, but it doesn't mean that individual people should do nothing to help.
So I would advise you to please talk to the person - to look them in the face - and find out more about them before you make up your mind.