I really like tweakguides as a resource and I do like that article, it explains how bad a problem piracy really is.
That said I don't agree with his tolerance of DRM, as it does nothing to prevent the piracy he details.

The question is: what will? Surely there is some way to reward buying gamers and penalizing or at least annoying pirates. As it stands now it's the other way around.

online games like WoW or online streaming like onlive does prevent piracy quite effectively. however, do you want it this way?

It certainly seems to me that all game companies are slowly migrating to online services rather than packaged product, as it eliminates piracy to an extent. Steam is a step towards that, as is OnLive.
I imagine everything will be streaming and never owned eventually.

TPB $9 million + $7.8 million
ReleaseLog $5,000 / month
Oink $300,000
Scapegaming $3,052,339
pirate business is not profitable

Fixed . . . =)