If the plain text does not match the cipher-text on the ballot printed in Step 2, the inconsistency is revealed and the voting machine is disqualified.
Otherwise, the ballot is consistent. The voter goes back to Step 2 to vote with another ballot (because an audited ballot cannot be used for voting).
So... how do you know that your current vote was recorded correctly? If auditing destroys your vote, then you have to go back and do it again, trusting that this time it will be correct. Since you'd have to go vote again, I doubt very many people would actually audit the results, so you could probably still sneak bad machines into the smaller and less techy areas of a country.
edit:
>A simple statistical calculation shows that very few audits (of about 1-2% of the votes) suffice for catching a cheating (or bogus) machine.
Seriously? You think 1-2% of voters will press the audit button and perform their own side decryption process with a trusted device?