Using a mathmatical model to project human performance is never an exact science. The model may be "right" for most players (eg his projection that Blake and Joel will regress) - but there will always be some players outside the norm.
Actually, based on your first sentence, I think he may be wrong about Blake (and possibly Joel). His PER formula makes adjustments for pace and minutes played. So, while Blake (and Joel) will probably see reduced minutes this season, I'm not so sure that his actual PER will decrease. If Blake plays most of his minutes against other back-up PGs, his PER may actually go up, even though his per game points and assists might go down.
Also, Hollinger uses historical data based on similar players at similar ages. If there's one thing Blake has shown it's that he's a MUCH harder than average worker. Most guys with Blake's natural talent are lucky to even get drafted, let around stick around the league as long as he has and become the starting PG on a 54-win team.
He posted his career high PER last season, and with his starting role in jeopardy, he's obviously worked hard during the off season to improve even more. Based on Nate's conditioning test, Blake is in incredible shape. He also looked great in the Fanfest scrimmage (I know, it's just a scrimmage, but his shot was in mid-season form, he played agressive and looked damn good out there).
I guess that's just one way of saying don 't sell Steve Blake short. People have been underestimating him his whole career and he just keeps proving them wrong.
I do think Andre Miller will end up being our starting PG, and playing more minutes than Blake, but I expect Blake to be extremely productive in the minutes he plays - quite possibly THE best back-up PG in the league. I also expect Joel to be THE best back-up center in the league this season.
BNM