You can download an APK using http://apps.evozi.com/apk-downloader/, decompile and modify just as the article has said, and push to the Android SDK's emulator. I have done several analyses of apps using this method and a MITM proxy.

I'm sure there are additional techniques to obfuscate the private key, but relying on locked down devices isn't possible in the Android ecosystem. You don't need a device at all to perform the steps outlined in the article.

Typical DRM/crypto problem. As soon as one party is out of your control (e.g. client on end-user device) you already lost. Even on the iPhone you could do a jailbreak. You could only make things more difficult, in worst case you would have to open the device and directly access the RAM or something.

Indeed you could personalizes the keys for every user. So you could detect a leaked private key that is widely used and proceed against. Still that wouldn't hinder personal further use of that private key, e.g. for exporting data (similar to breaking DRM).

Why exactly is that bad? Decompiling is a common tool, not only on Android. And however, Android notices that the app is signed differently, so it's still secure.