I didn't get that from the story. All those fantasy books he's read, and he only now ponders whether something is good just because the author labeled it "Good"?

I think you're being a little optimistic here in thinking your skepticism is at all general.

Why was Norman Spinrad's The Iron Dream so critically well-received and still read? (If you haven't read it, it's much like Eliezer's story except without the sane hero.) Because it demonstrated that most readers weren't critical, that they'd been reading fantasy stories for literally decades without cottoning onto how well the same stories justified genocide and fascism!