..which is what a competitor would see and possibly report you for hidden/obscured text stuffing. And Google probably would easily agree and possibly assign a penalty for such a blatant example.
Huh? Why do you say that's stuffing anything? Did that example show hiding of the text? You have me confused.
Looks like he was just putting in an H1 tag and making it smaller through CSS. That's perfectly fine, although I'd put my css in a separate file to make the page cleaner.
Are you saying because it's a small font that it isn't okay?
If it's a headline, it's a headline. It's fine.
If it's not a headline, then you're right, it's not so fine.