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Which is my understanding of it also. There is no new reaction, it's simply the addition of Hydrogen that adds more fuel to burn.
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No, it's not. Even if the whole thing works it would probably work in the way JSB described.
It just can't work the other way without violating the law of physics and without using cold fusion.
There were some claims that you can get cold fusion (I believe in the late 80' or early 90'), but after a lot of research it doesn't work. You can get >10.000 degrees in some part of the water but you can't get >1.000.000 which you would need for cold fusion.
It's also interesting that even the article says that the kid doesn't improve the milage of every car. That could well go togther with the claim that older cars burn gas less efficently and the increase of temperature increase the millage of those older cars while newer cars burn their fuel efficently either way.
Maybe the kit in total increases end methan production over CO2 which would damage the atmosphere more than a regular car.