Their description does not suggest they don't understand how PyPy works, but rather they don't think they can tackle the yet unsolved failure modes (blowup, etc) of trace compilation.

They approach they're describing is one that already works in V8, JScore, and IonMonkey, which is to mix type prediction, type analysis, and runtime handling of unexpected cases. Basically, you use type feedback information to get an initial set of types for a method, use type inference techniques to squeeze out type checks, and then compile the method in a way that handles the expected types in a fast path and traps into a slow path as necessary.