I agree with some of your comments, but to be fair this was posted in October 2009, so it's almost one year old. If I'm not mistaken, the new dictionary-style DATABASES setting is from 1.2, which only came out this year.
Not sure I agree about your comment regrading settings. It's quite easy to amend values from the main settings instead of overwriting them, you just do e.g. from settings import INSTALLED_APPS, then INSTALLED_APPS += ( ... ).
That said, I've found the approach to settings outline here: http://blog.zacharyvoase.com/2010/02/03/django-project-conve... to be quite intriguing and have been meaning to investigate it and possibly start using it.
Using old style DATABASE settings. Questions article's up to dateness and author's knowledge.
Importing local_settings into settings like that means it's hard for local settings to add to the various lists e.g. installed apps, middleware. It's far more flexible to import a base_settings.py into settings.py (which is the local settings file).
OA's templete thing is (if I understood it correctly) total fail. Learn about django.template.loaders.app_directories.Loader
Debug status based on domain name is not scalable, prone to error and annoying (I often need to switch debug on/off in dev/staging/production(pre-launch))