This "web-app" (if I may use the word), is a simple automated way of putting multiple stories in to PDF format. You could do it yourself at home. There is no ad, reformatting, or rebranding or selling involved.
This distinction seems very obvious to me.
This is legal in the same way that software that rips MP3s from CDs is legal.
On the other hand, distributing the content isn't. So you can rip the content and use it personally, but you can't distribute it without permission.
I'm saying that it would only be illegal if he attempted to distribute the content too, which he doesn't.
I understand the difference in distribution vs conversion, but it seems like this is almost a mix. I actually think this service is pretty cool, even though I hate PDFs in general... but I still had to ask. :)
Anyway, if someone complains that his/her site is included I will remove it.