From the video I thought it was going to be more of a hardware issue - eg the hot chips are on that side of the device, and the heat interferes with the touchscreen.
I wouldn't expect, though, that turning the screen off & back on would significantly lower the heat within. Leaving it off for a minute might, but the quick cycle he demonstrated in the video wouldn't.
I'm not sure I buy the heat hypothesis either. I encountered this issue very quickly when running a Tegra game: Tegra games aren't particularly demanding, but rather they exploit additional shader features. Other games and activities that heated up the unit substantially, however, did not cause these touchscreen issues.
