Hi Ron,
You and your sim are correct, the project is grossly flawed. :lol:
I didn't yet but will look on the author's forum to see any discussion about it.
I figure that the circuit will work the same if a common-emitter NPN transistor was used in the LM317 circuit, and visa-versa.
When the pot is halfway, the transistor will have 1.45V across it and the output voltage from the regulator will be that 1.45V plus the 1.25V reference which equals only 2.7V.
I think this circuit will work pretty well: