The adding procedure Eliezer describes isn't even covered by the setup of the paper you linked to. Eliezer is assuming that people have actual utility functions, whereas Kalai and Schmeidler implicitly assume that only equivalence classes of utility functions up to translation and scaling are meaningful. (The adding procedure that is well-defined in Kalai and Schmeidler's setup doesn't fail dictatorship, it fails independence of irrelevant alternatives as I pointed out in my comment.)

This is another reason not to take theorems too seriously, which is that they often have implicit assumptions (in the setup of the problem, etc.) that are easy to miss if you only look at the statement of the theorem.