If the IRS decides that bitcoins are like stocks and bonds, the IRS will accept an average cost basis rather than the user having to account for each individual bitcoin (or fraction of a bitcoin).
If it works like inventory, then the taxpayer will have to decide between several accounting strategies (last-in-first-out or first-in-first-out for example) when deciding cost basis. It's complicated, but it's an order of magnitude easier than what the author is suggesting.
I also have to wonder what tax returns would look like, once automated tracking occurs. Thousands of transactions per year, netting out to very little money (if and when btc/ltc values stablize) will make even electronic returns quite sizeable.
I suspect that once the IRS realizes it has DoS'd itself, it will decide that the foreign currency exemption of $600 was there for good reason and revert to currency rules.
I'm not for or against BC but the IRS definition is much more significant in terms of the future of Bitcoin.
If you trade foreign currencies you also have to pay capital gains tax. Bitcoin is being treated exactly as other currencies.