If both superclass and subclass are defined by the same loader, than by induction all classes in a given hierarchy have the same defining loader. This assumption is invalid. No such restriction has ever been part of the Java platform. Indeed, it would make very little sense. Consider the canonical use of class loaders, a web browser, where applets are downloaded over the network.
Every applet is associated with a dedicated class loader.
If subclassing across class loaders were prohibited, the library classes would have to be duplicated for every applet. The paper does in fact seem to assume that multiple copies of the built-in library classes exist. Rule 21, section 6.2 is the base case for loading. It assumes Object is loaded by the subclass' defining loader. This, in turn, would only be type safe if the entire library were defined in multiple loaders as well.