In the question:
who | grep $(tty | sed s:/dev/::)
outputs errors claiming that files a and tty do not exist. I understood this to mean that tty is not being interpreted before execution of grep, but instead that bash passed tty as a parameter to grep, which interpreted it as a file name.
There is also a situation of nested redirection, which should be handled by matched parentheses which should specify a child process, but bash is primitively a word separator, creating parameters to be sent to a program, therefore parentheses are not matched first, but interpreted as seen.
I got specific with grep, and specified the file as a parameter instead of using a pipe. I also simplified the base command, passing output from a command as a file, so that i/o piping would not be nested:
grep $(tty | sed s:/dev/::) <(who)
works well.
who | grep $(echo pts/3)
is not really desired, but eliminates the nested pipe and also works well.
In conclusion, bash does not seem to like nested pipping. It is important to understand that bash is not a new-wave program written in a recursive manner. Instead, bash is an old 1,2,3 program, which has been appended with features. For purposes of assuring backward compatibility, the initial manner of interpretation has never been modified. If bash was rewritten to first match parentheses, how many bugs would be introduced into how many bash programs? Many programmers love to be cryptic.