Let's rephrase, then. Suppose for a moment that you are 100% confident a lottery ticket costs $1, you can buy it, it pays $10^6 on a win, etc etc and that you are reading the ticket right now and believe it says the probability the ticket will win is 1/(4x10^6). Should you believe the ticket is +EV?

The wrong calculation: Yes, because you estimate you'll misread the ticket (or it's lying, etc etc) 1 in a million times, which makes the EV 10^6 x (10^-6 + (1-10^-6) x 1/(4x10^6)) = 1 + ~0.25.

The right calculation: No, because you'll misread the ticket 1 in a million times, which makes the EV 10^6*(10^-6 x P + (1-10^-6) x 1/(4x10^6)) = P + ~0.25 where P is whatever probability of winning with 1 ticket you assign to an arbitrary lottery that costs $1 and pays $10^6 where you incorrectly read the probability off the back of the ticket as being 10^-6 (or it's lying, etc etc). If your priors say P ~= 1 then they need adjusting; if they say P ~= 10^-7 to 10^-6 then they probably don't need adjusting. And then the EV is ~= 0.25 again.

AFAICT this is the same as in the post, but I'm not certain I understand precisely where your question is.

Edit: ha, I put 10^-5 to 10^-6 (which is of course silly) instead of 10^-7 to 10^-6, but RobinZ put ~0 anyway