I disagree that this blurs any kind of line. The Sur-ron is an electric dirtbike, before you've done any upgrading. It uses a bunch of mountain bike parts to save on weight and cost, but it's still just a dirtbike.
These upgrades are getting pretty popular for the sur-ron, and while I can see why, at a certain point it feels like you should have just bought a better bike.
That battery and controller together is $3000, the bike alone is $3500. By the time you upgrade all the cheap mountain bike parts, like the forks, brakes, and tires, you're creeping awfully close to bikes that are just much better out of the box. I saw one sur-ron owner who had spend $10k total. A that point I would personally rather get something like a cake, electric motion, ktm freeride, zero fx, etc.
As for it being realistic, I think the 5x claim is inaccurate, but he's probably comparing peak watts put through the motor. The motor itself doesn't know or care if you put more power into it, which is all this upgrade is doing. What we do know is that he's putting more power than the motor was designed/rated for, and this may or may not shorten the life of the motor depending on how hard it is regularly ridden, and how conservatively the motor was rated.
I don't think the sur-ron has a contactor. Most bikes in its price/power range do not.