What he can't do, is apply a modified GPL. The GPL doesn't allow itself to be modified, because that would violate his license to use the GPL license!

Your objection would at least aspire to relevance if Schilling had created a derivative work of the GPLv2 contents. As already mentioned just before (supra), he did not: He simply stated that GPLv2 terms apply to that copy of his codebase, plus one additional condition of his own.

This is more commonly done to tack on additional permissions, but it's very widely done. Probably the most common example is the very many (otherwise) GPLed codebases that have a licence exception tacked on to permit them to be linked to OpenSSL, portions of which are under the old BSD licence (with advertising clause).