The are a number of problems with Ludwig's argument for atheism. The first is one of the most common errors in this kind of argument and that is the presupposition that a god must be the classical Judeo-Christian omnipotent, omniscient, infinite god. There are an amazing variety of gods out there in all shapes, sizes, and flavors who this argument doesn't necessarily apply to. This could easily be fixed by modifying his argument to consider it just against this certain type of god; however, then it would no longer be an argument for atheism but simply against the Christian type god.
Furthermore, this argument only considers one effect of the belief, that being the resultant sense of inadequacy that comes from projecting your infinite potential onto/into something else. It ignores an enourmous amount of other effects of religion; granted some of these are good while some are worse, but they must still be considered in such an argument. It even ignores the other psychological effects such as the added confidence in the belief that god is on your side
As an aside, I myself am an agnostic who feels that the whole religion thing isn't worth it most of the time; however, you can probably get a better argument against Christianity from Bertrand Russel's Why I am not a Christian, although I can't remember if he uses this type of argument along with everything else.