While the author here has been credibly accused of abuse, and so I have no desire to raise his social status, I see this concept as valuable. In fact, it is a good model of at least one element of the vaguely-defined concept of privilege.
Take general social assertiveness. Men are generally Bob, while women are more often Carol. However, it appears that women look at all the B men are getting away with without suffering Y, and see men as Adam. On the other hand, men see the amount of B women can afford not to do without suffering X, and see women as Alice. Therefore, women talk about the male privilege of being able to do B, while men sometimes talk about the female privilege of being able to not do B (only sometimes, because an element of B is not complaining about it).
However, this does not change the fact that Bob is genuinely in a better position than Carol.
It is half of an iterated PD, and the other half is invisible to you.
It doesn't actually matter. We already know Omega's strategy choice, and it can't be changed.
The second paragraph is a bit handwavey. It's basically the bit that turns Newcomb into an iterated game. As there's this causal loop, it can be unlooped by converting into an iterated game, and using your action in the previous round as a proxy for your action in that round. So Omega plays based on your previous action, which is the same as your next one.
Thought the connection seemed obvious enough that I couldn't be the first to see it! Although there are some differences. Lewis sees the one-shot PD as a really weak Newcomb (weak as in the predictor is inaccurate), while I see the iterated PD as equivalent to a far stronger Newcomb.
Ok, that's satisfied my curiosity as to what happens if you push the button without codes, and so I am not going to push the button.
X>W>Z>Y is interesting. It's similar to a PD, and so it appears that many of the same systems that evolved to enforce cooperation in PDs misfire in those cases and end up with Z (based on some observation, not any good evidence). However, unlike in a PD, Z is a worse outcome than the purely selfish X.
If a PD has the option to transfer value to your playmate and create more value, a XWZY (aka Deadlock) has the option to transfer value to your playmate inefficiently, so, in the inefficient state Z, both people are sacrificing to benefit the other, and yet each would be better off if the norm of sacrifice were not present.
EDIT: All of this assumes 2W > X + Y.
That sort of honour is probably level 1.
I thought that as I was reading this, but came to different conclusions. I see a focus on honour and reputation as a level 3 concern, while a focus on PR is a level 4 one.
I think your 5% figure of KABOOM given retaliation fails to condition on kaboom.
I would estimate an 8% chance of kaboom (broadly following prediction markets, going by a 10% chance of the order to nuke Ukraine and an 80% chance of it actually happening) and an 80% chance of retaliation. For KABOOM, either the West or Russia would drop the first strategic nuke. For the West, the probability is somewhere around 0.1% given kaboom. For Russia, while the probability of KABOOM given escalation is probably less than 5% (more like 1%, I'd guess), kaboom has happened, and so the probability of Russia dropping a strategic nuke is closer to 12.5%. And so, the final probability of KABOOM is closer to 0.9% than 0.25%.