1. The fudge factor is flat after 1970. The hockey stick we care about is after 1980 or so, sharply increasing in the 1990s and 2000s.
2. The fudge corresponds to problems with recent tree-ring data that were discussed in previously published literature (I don't have the citation). The phrase "very artificial" almost certainly means it's a crude estimate based on some model that's simpler than the author would prefer -- hence, the flat line for recent values.
3. If this was an open-source project, you'd see a reference to the article that explains where the fudge came from, but it's not. Natural scientists tend to not really believe in software engineering, they just write a procedure and munge it until it works, leaving dead code and mysterious comments in their wake. (Source control? That sounds like fluffy industry stuff...) As JCG pointed out, yearlyadj isn't used in the copy of this script that we have, although it might have been used in an earlier draft of the script.