I know that Eliezer Yudowsky is creating a more optimal world when I see someone on the Internet use the words "mere billions of humans".
People argue that pain is necessary to provide contrast to happiness
You should read this: http://www.nickbostrom.com/fable/dragon.html
It makes your point well. This is also touched on in HPMOR.
There are many examples of this scenario, both in fact and fiction; an untranslatable word so laden with connotation that it cannot effectively be replaced. Usually, these words represent some core value of their society of origin (reference: the Dwarves' Super-Honor in Eragon). In a way, the fact that they cannot be translated helps convey their meaning, showing their importance and giving them a quality of both simpleness and complexity, as if your brain was meant to have a word for them, as if they were simply a basic part of the universe falling into place. It's a beautiful thing, really.
Oh, you can believe he's taken it into account. It's probably secretly a major plot point or something. He's Eliezer Yudowsky.
It could actually be the other way around-- an exponential decay. You would be horrified by killing one person, but as the numbers grow, the killings get more impersonal and therefore easier. However, killing a billion people one at a time would still hurt as much as killing one person times a billion.
Actually, it's probably more of a twisted, jumbled mess of a correlation that no one has the time, resources, or heart to untangle.
Actually, it's probably more of a... hold on.
[EDIT: I had originally made a very detailed graph out of characters, but it didn't format correctly when I posted, so...]
There! A skewed S-curve with a negative exponential progression!