What a fascinating discussion. It makes me reconsider a key scene in my own work, when my protag faces a reversal. I shall now have to go back and see if I cant "process" the emotion a little more for the reader.
I do agree that there is some sort of confusion over terms. I haven't read the book, but I did read the linked article, and it seemed to me that what he was explaning in the bulk of the article didn't match exactly the writing exercise at the end. Someone please correct me if I got it wrong, but it seemed as if his larger point was that emotional scenes carry greater weight for the reader if you devote some space (about a paragraph, he said) to describing the emotional reaction of the character in various ways (how it feels to feel the emotion, what physical symptoms might appear, what elements in the environment might draw the attention of the character as a result of this emotion, etc.). He says that this goes against the grain of contemporary writing because it's "telling", and not "showing". If I understand this correctly, the goal is to help the reader arrive at a deeper understanding of the character's emotion than the character themself may get. His example was a child character, experiencing maturity for the first time, who doesn't necessarily understand what he is going through, or where this will eventually lead. But the reader does.
That connects to the other point, which is that what the reader feels is not the same as what the character (or the author, for that matter) feels, and we have to do some extra work to get the reader to feel something. The kicker to this thought is that the goal is not necessarily to influence the reader to experience the same emotion that the character is going through (because that's impossible) but to feel their own reaction to the writing instead (most of us are not children, so we probably can't recapture the experience of growing up anymore). That's ok, because the goal isn't to perfectly transport the reader into the life experience of a child, but to cause the reader to feel an emotional response to the experience of a child. That may be something more akin to a kind of bittersweet nostalgia.
Where I'm a little confused is exactly where the phrase "third level emotion" fits in to all this. Maybe it doesn't matter--the point may simply be that direct, raw emotion on the part of a character can, through skilled writing techniques, become transormed into a more nuanced understanding on the part of the reader.
Is that about what other's got out of it?