I'll grant you that. But the top end models such as http://kayakpro.com/speedstrokegym/kayak.php do not allow resistance to the upper arm either.

Getting off-topic a bit: Although they all have said that the upper arm is contributing to forward propulsion (25-40%?) the coaches I've had and the experts online generally talk about the upper arm in terms of control and a connection from the rotating torso to the paddle shaft. The old idea of 'pushing' or 'punching forward' with the upper hand is definitely not in favor these days - and rightly so, IMO, as thinking along those lines tends to lead to 'arm paddling'.
The main improvement I'd make to that DIY machine would be to the seat - look a the hard 'bucket' seat in that pro ergo; it's a long way from a piece of wood with foam attached. A swivelling seat might be even better for paddle stroke mechanics, but might make the balancing act even harder.

I've never used a paddling ergo - anybody have experiences to share?