Yes, the educational goal of that paragraph is to "taboo addition". Nonetheless, the tabooing should be done correctly. If it is too difficult to do, then it is Eliezer's problem for choosing a difficult example to illustrate a concept.

This may sound like nitpicking, but this website has a goal is to teach people rationality skills, as opposed to "guessing the teacher's password". The article spends five screens explaining why details are so important when defining the concept of a "number", and the reader is supposed to understand it. So it's unfortunate if that explanation is followed by another example, which accidentally gets the similar details wrong. My objections against the wrong formula are very similar to the in-story mathematician's objections to the definitions of "number"; the definition is too wide.

Your suggestion: '∀x∀y∀z∀w: R(x, 0, x) ∧ (R(x, y, z)↔R(x, Sy, Sz)) ∧ ((R(x, y, z)∧R(x, y, w))→z=w)'

My alternative: '∀x∀y∀z: (R(x, 0, z)↔(x=z)) ∧ (R(x, y, z)↔R(x, Sy, Sz)) ∧ (R(x, y, z)↔R(Sx, y, Sz))'.

Both seem correct, and anyone knows a shorter (or a more legible) way to express it, please contribute.