Niantic didn't block your school address; your school did.
If an organization is using a Gmail interface with their own domain name's email addresses, they're using a version of Google Apps (such as or ). Google Apps lets the organization control which Google services (like Ingress) its users' accounts can access. Schools tend to block a lot more non-essential services than corporations, so I'm not surprised your school address didn't work.
Unfortunately, if ditched Google Apps, and similar users are probably screwed. As far a Google is concerned, Virgin was the paying customer. Virgin has the contractual right to delete the user account that contains her Ingress data. Google can't overrule the paying customer, and Niantic can't overrule Google.
Tell all your friends, people! As long as Ingress requires a Google account, it's not safe to sign up with an email that "works like Gmail," because your Apps administrator can delete your Ingress account any time they want. Either sign up with an address that definitely IS Gmail, or definitely ISN'T Gmail -- it's the in-between accounts that are the least safe.