Personally, I disagree with a lot of what he says. IMO, people buy their 5 downloads, and once their used their used. Also you can only give the content to 5 people period. Meaning if I allow 5 people for instance to get on my account and download battlefield 1943, I can't then allow 5 different people to log on and download the latest little big planet costume. So it's locked to 5 people and only 5 people. (Unless you deactivate your account....)
Also, although it's legal to do that disc crap where you lock content and make people buy the unlock. I think it's a very, very, very cheap move for the most part. There are few times when I would say it would be okay, but locking character skins, that's BS.
It all comes down to opinion. Though it is illegal because you signed a agreement when you signed up for PSN, I think as long as you only have those 5 people enjoy the game, it's fine. I am not saying you should do it, but I think you should be allowed to. (Just covering my butt