"What sentences in the article lead you to this conclusion?"

Each sentence in the article in itself is good. The sentences together reveal that the author had no understanding of the topic. (or decided to wilfully write a confusing mess)

Let me illustrate:

"
Space junk travels at an incredibly fast speed of more than 22,300 mph, so can have cause considerable damage to any objects it hits.

In 2006 a tiny piece of space junk collided with the International Space Station, taking a chip out of the heavily reinforced window.
"
This is true! Objects on orbit have very high energies. When two of these objects collide they generate tiny shards which can collide into new objects, shattering them too. This can lead to a cascading problem where many satellites on a given orbit turn into mush at the same time. And not only that you loose these satellites, but their shards remain on the orbit posing risks for future satellites. You might heard of this effect as the Kessler syndrome.

You might be wondering, how does making the sat from wood would help with this? The answer is it wouldn't. But you wouldn't know that from the article. It has zero connective structure to illuminate this.

So why are these people working on a wooden satelite? To quote again from the article:
"We are very concerned with the fact that all the satellites which re-enter the Earth's atmosphere burn and create tiny alumina particles which will float in the upper atmosphere for many years,"

Ah. So these people are not worried about the Kessler syndrome. They are worried that re-entering space craft break up, and particles from it can remain in the upper atmosphere. That's an interesting problem. Maybe worth addressing. But if that's the problem why is the article waxing about speed of objects in orbit and chips colliding with the international space station?

You say you can't find a good definiton of the term "re-entry pollution". And you are right. It's not a widely used term. But clearly an apt description of what the company is talking about. Is this a serious concern? Has there been studies about this effect? Is there a more commonly used term for this kind of pollution? Who knows. I don't know. You don't know. The article should be answering these questions for us. Instead all we have is a single sentence ""Eventually it will affect the environment of the Earth."" Nice. Not very well researched. And probably even the journalist felt this is not enough so they wrote multiple paragraphs about what he could find of the dangers of space junk. But sadly he found a totally irrelevant other kind of problem. If they realised this and wrote the article still as presented then they are wilfully confusing people. If they are just dazzled by all the terminology then so bad, I would still expect more from professionals.

"On balance, the journalist (and perhaps the editor) appears to be correct here."
What do you mean by that? If someone writes a word salad they are correct just because others have wrote similar word salads before?

"Wikipedia doesn’t appear to recognise the term “re-entry pollution”."
So bad for the company and the journalist. It sounds like they have to do more work to explain their problem then!

And your ecfr.gov link. It talks about making sure that your satelite does not explode on orbit. (To mitigate the problem of the Kessler syndrome.) It also talks about post-mission disposal in paragraph (4). It contemplates two scenairos. One where you put your sat to a lesser used orbit, or one where you deorbit your satellite. In case you choose to deorbit you have to show that you are not too likely to plonk anyone in the head. From the perspective of this second scenario the whole sat burning up into aluminium mist in the upper atmosphere is a success. The company disagrees and says that we should worry about other unspecified effects too. Are they right? Maybe! But the article sure didn't do a good job to explain the distinction, and thus failed to ask the pointy questions it should have asked.