If you read some of the followups and tweak the math a little bit, it works out reasonably well. Instead of 20kg and 1m, 20lb and 2m, which comes out about the same (49.42mWh). If you have to lift it every half hour, that's 100mW for a half hour. That's more than enough power to get a useful amount of light out of an LED.
That's fine! It's enough to read a book or do homework after the sun sets. We're not talking first-world style lighting; we're talking about a $5 light that is better than sitting in the dark because you have no electricity and ran out of kerosene to burn.
It depends on the type of LED. Back when I was playing with them, Luxeons had a 180 degrees beam pattern while Crees were 70 degrees and neither had a built in lens like the cheap ones do (they used some kind of gel cover).
They really should consult some lighting experts or flashlight junkies to get the best bang for the buck.
I suspect it's even less than that. A fancy (= expensive!) bicycle hub dynamo has an efficiency of about 70%, and that's assuming that it's operating at peak efficiency, and that there are no additional mechanical losses in the lamp.
For example, this LED uses 68mW https://www.sparkfun.com/products/531 and is marketed as "so bright that it hurts to look directly at them"