From the article: "...replacing JPEG with something better has been a frequent topic of discussion. The major downside to moving away from JPEG is that it would require going through a multi-year period of relatively poor compatibility with the world’s deployed software. We (at Mozilla) don’t doubt that algorithmic improvements will make this worthwhile at some point, possibly soon. Even after a transition begins in earnest though, JPEG will continue to be used widely."
This is Mozilla's roundabout way of saying that they want to put off starting on WebP or JPEG 2000 as long as possible.
More like 500-2000ms - there are a few commercial codecs (Kakadu - as licensed in OS X, Aware) which are well-polished but the open-source situation was wretched for many years, relying on a few libraries which were indifferently maintained and seriously unoptimized. This meant that there were many valid files which could not be opened, key features like tiled decoding weren't supported and everything is so much slower that users will comment on how much longer it takes simply to open or convert a file.
There is some good news in that OpenJPEG (http://www.openjpeg.org/) has been making significant progress in recent years and is now on track to become an official reference implementation:
In hindsight we did indeed spend too much time experimenting and tweaking, and not enough time saying "it's good enough" and driving it to completion.
But it's open source :) we're still working on getting it there. The next release will dramatically scale back the API complexity, lock in the APIs and data formats, and pave the way for native browser extensions, self-hosted polyfills, etc.
I don't see any evidence of a scam; Dwolla uses similar social background checks. I think what we're seeing here is the difference between fraud detection and fraud prevention where they can't afford to be wrong.