Among the four axioms used to derive the von Neumann-Morgenstern theorem, one stands out as not being axiomatic when applied to the aggregation of individual utilities into a social utility:
Axiom (Independence): Let A and B be two lotteries with A > B, and let t \in (0, 1] then tA + (1 − t)C > tB + (1 − t)C .
In terms of preferences over social outcomes, this axiom means that if you prefer A to B, then you must prefer A+C to B+C for all C, with A+C meaning adding another group of people with outcome C to outcome A.
It's the social version of this axiom that implies "equity of utility, even among equals, has no utility". To see that considerations of equity violates the social Axiom of Independence, suppose my u(outcome) = difference between the highest and lowest individual utilities in outcome. In other words, I prefer A to B as long as A has a smaller range of individual utilities than B, regardless of their averages. It should be easy to see that adding a person C to both A and B can cause A’s range to increase more than B’s, thereby reversing my preference between them.
You're right that this is the axiom that's starkly nonobvious in Phil's attempted application (by analogy) of the theorem. I'd go further, and say that it basically amounts to assuming the controversial bit of what Phil is seeking to prove.
And I'll go further still and suggest that in the original von Neumann-Morgenstern theorem, this axiom is again basically smuggling in a key part of the conclusion, in exactly the same way. (Is it obviously irrational to seek to reduce the variance in the outcomes that you face? vN-M are effectively assuming that the answer is yes. Notoriously, actual human preferences typically have features like that.)
I said this in a comment on Real-life entropic weirdness, but it's getting off-topic there, so I'm posting it here.
My original writeup was confusing, because I used some non-standard terminology, and because I wasn't familiar with the crucial theorem. We cleared up the terminological confusion (thanks esp. to conchis and Vladimir Nesov), but the question remains. I rewrote the title yet again, and have here a restatement that I hope is clearer.
Some problems with average utilitarianism from the Stanford Encyclopedia of Philosophy:
(If you assign different weights to the utilities of different people, we could probably get the same result by considering a person with weight W to be equivalent to W copies of a person with weight 1.)