Correct, but the post you quoted - before the part you quoted from it - said the poster used the "best online rate," not the rack rate. On this basis, assuming the poster would have paid for a room in that hotel anyhow rather than seeking out a less expensive place to stay, his/her valuation makes sense.

The only catches to paying for points via taxes for this purpose are (a) you can often get them less expensively if you have enough time to accumulate the ones you need, and (b) the rewards that make them most valuable aren't always available. If neither of these applies, this is indeed a good way to get a nice hotel room cheap.