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Seems clever. From their own provided tests, the difference is negligible. The simplified scene representations can look quite horrid when shown directly, but as I understand it, they are only used for very long rays from very diffuse reflections. Sharp mirror-like reflection rays and ones that traveled short distances will still retrieve data from the full resolution polygon representation of the scene, no?
The problem is that AABB is not ideal for approximating actual geometry shape. AABB's size can be vary depending on the transform of the instances even for a single geometry. What about thin, long pipe orienting 45 degree?
For AO rays that requires exact ray length information, skipping hit test on an actual primitive/triangle and early terminating on a large AABB makes the scene overall dark. Almost all test scenes in the paper represents this problem clearly.