I don't think his scheme buys anything. Any pointing system in which a wrong answer has more weigh than a right answer will siply incensitive student to aim for the fair confidence level, the one that gives -1 for a bad answer. You need so few 'bad confidence' result to completely wreck your overall score that it is not worth it.
The main flaw of the scheme is that it is a purely mathematical analysis. Answers are not based solely on confidence but often relies of reading comprehension skills. (Even at the pure mathematical level. For example missing a square factor and a minus sign.) So you can have 100% confident incorrect answer just because you mis-read or mis-interpreted the question. Then you get punished hard. Given one's incapcity of self introspection and detection of such mis-reading, and the harsh punishment for such undetectable failure on the part of the student, his scheme is wrong headed.
Why wouldn't your knowledge of how often you misread problems factor into your estimate of what the probability of your answer to the problem being correct is? The scheme is rating how well you answer test questions, not how well you know the answers to the problems. As you point out, there's subtle differences. But no grading scheme on earth could address those subtle differences, so it's not exactly a failing if his scheme doesn't.
I imagine the first test or two would be a period of the students learning to understand the system, but after that it's perfectly fair. It's a good lesson in "You aren't 100% sure of anything, so don't claim you are".
The main flaw of the scheme is that it is a purely mathematical analysis. Answers are not based solely on confidence but often relies of reading comprehension skills. (Even at the pure mathematical level. For example missing a square factor and a minus sign.) So you can have 100% confident incorrect answer just because you mis-read or mis-interpreted the question. Then you get punished hard. Given one's incapcity of self introspection and detection of such mis-reading, and the harsh punishment for such undetectable failure on the part of the student, his scheme is wrong headed.