No, he was correct.
Just because modders can expand the size doesn't mean a thing. Modders expand something that is SAVED ON A COMPUTER. It would never fit on a disc with all the other content TES has.
There are people that have 10 GBs of mods. Are you saying that all of that content could be added to the game, just because modders can do it? No, because a game disc isn't even 10 GBs.. Until the memory on DVDs is increased substantially, or Microsoft buys the rights to use Blu-ray, games with TES-level content will never be Just Cause 2 sized.
I think there's an issue beyond this as well though. Bethesda has camps of people who play differently wanting a ridiculously fleshed-out experience for their style of gaming.
Thieves/Assassins want a huge amount of Guard and NPC AI, restocking merchants, improved sneaking using shadows and sound, grappling hooks, torch extinguishing methods, etc.
Mages want improved spellcasting, spell combinations, alchemy and enchanting.
Warriors want improved physics engines, more immersive combats and impacts that you can "feel", as well as more varied equipment and weaponry.
Then you have social characters or immersion players who want more methods to complete quests without combat options, improved NPC AI, fully fleshed out daily schedules, etc.
Add to this increased land area, more detail, more immersion, better economies, cloaks, capes, mounted combat, and so on, and you have multiple fully realized games that people want combined into a single title. I know I'd love to have a Tamrielic Thief: The Dark Project for when I'm playing a sneaky character, 50 different armor and weapon types with realistic physics for when a troll whacks me with a club for my warrior character, and earth-shattering spell effects and the ability to combine multiple spells with unique outcomes for my mage character, but it's just not going to be possible with the time constraints.
Though I don't think adding large mountains is unreasonable by itself, the sheer volume of what is being expected starts to get out of hand.