This doesn't sound that terrible. One enters into a short put position when he believes that XYZ company is worth buying at $X, but not at the current price. So you open the short put position at the $X strike price and either collect the premium if the stock doesn't go down, or be assigned the shares at the price you think they're worth if the stock does go down. Assuming you did your research right, both are good positions to be in.
And remember: if a particular option you're selling has a really high premium, it's because the market expects the position to be risky.
What you said has little to do with dollars and cents and more to do with perspective. People short puts for all kinds of reasons, only one of which is that they believe the stock is worth buying at that price. For example, someone might short a put if they have strong convictions the stock is going to have lower volatility than the implied vol of the price of the option, regardless of the intrinsic value of the stock. Or, as is likely in this case, that the market has priced in excessive volatility pre-earnings. From strictly a money point of view, this guy is sitting on a large unrealized loss simply because this thing unexpectedly got leaked. This event was obviously not priced into the option chain. His intention was to not be exposed to GOOG post-earnings and the black swan event of some idiot mis-releasing earnings caused him to get hammered.
I'm not a stock expert and we have limited information here but I think I understood the dilemma in a different way, perhaps someone can fill us in. I took OP's explanation that this man had actually shorted (sold options he didn't own) put options in the past. If their strike price happened to be very close to the Google share price early this morning, and they expire this Friday, then they would be relatively cheap to close (i.e. buying them back to close his position). However, the price drop would cause those same put's to jump in price by roughly the loss on a share. So what would cost him a few dollars or pennies per share to close, now costs $60 per share to close. Options are traded in 100 packs so I take it this put him back thousands.
Being forced to buy 700 dollar shares at 760 (or whatever) is not a good position to be in. Especially if you don't have the money, which happens often enough.
And remember: if a particular option you're selling has a really high premium, it's because the market expects the position to be risky.