Despite being wrong about the problem, the author's solution is not bad. For a serious commercial endeavor, $100/year is insignificant. For a personal site, it's a fortune. The author's solution does seem to solve this problem.
There are still problems though.
1. The .com TLD is so prolific that using a different TLD is a problem even for personal sites. The author's solution would've been great if it was implemented from the start. Right now, it might be good at best. Even if you just show your site to a few of your friends, some of them are likely to get the TLD confused if it's not .com. If this was implemented from the start, though, that wouldn't be a problem because everyone would know that personal sites don't use .com.
2. Domain squatters, the real problem, will still exist. They'll just be more selective. If someone can get beer.com, they'll still do it if it's $100/year. That's still likely to be a good investment. If you raise the price enough to make that a bad investment, you've probably priced out a lot of serious commercial sites that just don't have the money for an expensive domain name.
Perhaps a better solution from the beginning would have been to have a bunch of cheap TLDs that anyone could use for anything at $1/year, and then .com which would have varying prices depending on the value of the domain. True, you can't predict with certainty what will be valuable, but you can predict with reasonable certainty that any word in the top 1000 English words is likely to be valuable. You can similarly predict that shorter names are likely to be more valuable than longer ones.
Of course, we don't have the option of changing what was done, so that's probably all moot.