After much fighting with it, it does certainly work. I question the usefulness of the first example. There are a lot of extra things included in the code that I'm not sure what purpose they serve. For instance the "new Array("one", "two", "3"));" that gets passed to the function that always display "two"... maybe we could have simply sent "Hello World" as a string... that way I have less to confuse me.
Also, the first code block is not closed properly and will error, it requires an extra "</RTE2ToolbarExtensions>".
As well as, for me the button never actually resets after the first time you click it. I think that's a bug in the code.
Lastly, the location of the RTE2ToolbarExtension.xml file, saying "Open the RTE2ToolbarExtension.xml file in the Editing Menu folder in the Master Page gallery" was somewhat confusing for me (despite it being absolutely correct). As this file DOES NOT exist on the server filesystem (you can search c: if you don't believe me). You must access it from either Sharepoint designer or from the actual Sharepoint web ui.
I find it ironic that this page is pretty much the ONLY place on the internet (currently) that has any info on these RTE_ commands... not even in the SDK. So, for it being the ONLY example available, its a pretty poor one, and is causing new Sharepoint developers significant pain.