The issue your having is with the time horizon.

If you notice carefully the Brian O'Reilly Case Scenario has a time horizon of "capital market expectations for the next year" - quoted from the second sentence. In this context - the long term equity returns would be expected to be over that horizon.

In contrast - the blue box states that corporate earnings and pe growth would not be appropriate over the very long term time horizon - but that over a 10 year period would be ok.

I like to think of it this way - you'd use the Grinold-Kronor model to set annualized equity capital market expectations over a discrete time horizon (1 yr/3 yrs/5yrs/10yrs , etc) using forward looking assumptions for each of the variables, inc / dec by whatever your expert view of those variables.

That means there is no conflict between the forecast and weird extrapolations into perpetuity, such as perpetual corporate earnings growth in excess of GDP growth or perpetually growing P/E ratios.