That was a fantastic interview, and Ted Price always comes across as being one of the most intelligent developers in the world, but I can't help but think that he's overreacting a little.
Video games shouldn't be treated as illegal substances in a country where not even film ratings are legally enforced. Only the ESRB should be allowed to rate a game. A child's parents should have control over what the child plays. Those are the reasons why this isn't a good law.
But retailers aren't going to stop stocking "18"-rated games. Look at Modern Warfare 2 - a definite 18 right there, but a large retailer would have potentially made tens of millions of dollars in profit off that single game alone. Some of the best-selling games are the violent ones. Besides which, they still stock tobacco and alcohol, despite the fact that both substances are restricted.
The point he made about Ratchet burning to death in lava is a good one, though. What constitutes a "violent" game? Should R&C, one of the most mild and harmless games on the PS3, really be slapped with an 18 sticker?