I'm pretty sure its an AO bake, but I will check the tutorial again. I'm pretty sure, because in the pimping section, another user is using the same eat3d tutorial method with similar results. here's his AO attempt the post is http://boards.polycount.net/showthread.php?t=53632&page=2 (page 2 of the thread) I'lll definetly…
Having followed every step in that tutorial I can vouch for it being AO. He does use a ceiling and a floor (if I remember that correctly) to "capture" the rays that are being cast so they don't bounce off into infinity. I also recommend giving xNormal a try, although I haven't taken the time to fiddle with all the knobs so…