I think you are mixing up object-level ethics and metaethics here. You seem to be contrasting an Egoist position ("everyone should do what they want") with an impersonal utilitarian one ("everyone should do what is good for everyone, shutting up and multiplying"). But the dispute is about what "should", "right" and related words mean, not about what should be done.
Eliezer (in Richard's interpretation) says that when someone says "Action A is right" (or "should be done"), the meaning of this is roughly "A promotes ultimate goals XYZ". Here XYZ is in fact the outcome of a complicated computation based from of the speaker's state of mind, which can be translated roughly as "the speaker's terminal values" (for example, for a sincere philanthropist XYZ might be "everyone gets joy, happiness, freedom, etc"). But the fact that XYZ are the speaker's terminal values is not part of the meaning of "right", so it is not inconsistent for someone to say "Everyone should promote XYZ, even if they don't want it" (e.g. "Babyeaters should not eat babies"). And needless to say, XYZ might include generalized utilitarian values like "everyone gets their preferences satisfied", in which case impersonal, shut-up-and-multiply utilitarianism is what is needed to make actual decisions for concrete cases.
But the dispute is about what "should", "right" and related words mean, not about what should be done.
Of course it's about both. You can define labels in any way you like. In the end, your definition better be useful for communicating concepts with other people, or it's not a good definition.
Let's define "yummy". I put food in my mouth. Taste buds fire, neural impulses propagate fro neuron to neuron, and eventually my mind evaluates how yummy it is. Similar events happen for you. Your taste buds fire, your neural impulses ...
From Costanza's original thread (entire text):
Meta: