I'm not sure if I really understood the explanation, but it sounds reasonable. The USM filter selectively changes the contrast after all.
I never had the radius setting _that_ high though. So I tested it and the image really looked better. But I'm not able to tell if the "dynamic range" really improved of if it's just the normal effect of the contrast enhancement.
I took this shot of some racing dories today. It was really hot and humid; you can even see the haze in the photo. I tried the contrast enhancement trick for this shot. It seemed to work to some degree. Comments welcome.
I just tried this on a particularly troublesome photo from a band shoot, it worked wonders! The effect is subtle enough that it doesn't strike one as being edited, yet clearly improves the look of the photo.
By way of comparison, I thought I would post this. I know this is not the greatest photo I've ever taken; it was shot with my old camera in terrible lighting conditions. Anyway...