Personally, I tend to think he is glowing over some aspects and being a little creative with others.
The three "additional" costs he mentioned are complete whitewashes. I don't think there is a publisher out there who would accept a non-digital manuscript, except in very very special circumstances, so digitising the file is ridiculous. 
What makes that argument funnier is that a lot of pirated books are hardcopy books which have been scanned and OCRed by someone.
Mentioning the "quirks" of each reader, again, this is a blind alley. While it is true each of the readers has different quirks, the file format used is generally a subset of HTML, encapsulated in some sort of archive, usually .zip. it may have a different file extension, but that's how they roll.  
Also, formatting should br ad simple SD running a script on the digital file the publisher demanded from the author.
Incidentally, could you ask your publisher to accept a paper manuscript? Reaction would be interesting.