How should you handle it? Say no....
Generally, I would simply not allow this. As others have mentioned, this is only questionably within the rules as written and clearly an abuse of the rules. The lack of published stats for those generations also implicitly goes against it. As a Storyteller, I would simply forbid the path of blood from lowering generation below 4th and as a practical matter I would discourage going below 6th.
Also, true love's extra dice can only be invoked if the true love is involved....
Unless...
Under the right circumstances, I might make an exception and allow it. Imagine that the true love is being held hostage but instead of deciding to pay the demanded ransom our Tremere hero decides they want to do a little preparation and then charge in and rescue the True Love.
Then, the true love merit's extra dice are fully justified. I might even decree the character's willpower pool is temporarily at 10 and completely refilled without other shenanigan's because our character is just that focused and that desperate. If the dice are with them, I would let the generation drop to 3rd for a short term. Mechanically, I would say that a 3rd generations maximum blood pool is so vast as to be effectively unlimited and that the maximum blood spent per turn is limited only by the available blood pool.
But this is a rare and short term situation. For a limited time, that character has exceeded their normal limits so they can be an Unholy Avenger. That night they will rain down death on those that have chosen to threaten their true love or die in a fiery blaze trying... As the storyteller, I might put on Disturbed's Vengeful One as background music and indulge in ample purple prose such as referencing Poe about how neither the angels in heaven above nor the demons down under the sea could ever dissever the soul of our hero from the True Love.
But that is the climax of a chapter in the Chronicle. It is a special situation. The next session would probably be denouement about the characters dealing with the fallout of the rivers of blood they created in the last session and the session after that would move to a new chapter with the spotlight shifting more onto a different character.
Why the resources spent don't change this...
The self answer suggests that this trick should be allowed because of the resources it takes to get there. The problem with this suggestion is that barring this would not mean those resources were wasted at all. Willpower is almost universally useful. Thaumaturgy is a powerful discipline that I have invested all three starting dots into as a Tremere without thinking about shenanigans like this...especially if I know the storyteller will be lenient in letting me learn the rituals which are often more useful than the main path power...
The only investment we are talking about that is really situational or of questionable value without tricks like this is the True Love Merit. And while I do think that merit is highly overpriced, it is by its nature meant to be situational. A player would sooner talk me into house ruling a reduction in True Love's price then they would convince me to let them pull off this type of trick unless it was the dramatic climax to a chapter where the trick was actually appropriate...