No, he's not mixing up reference frames, the issue is more subtle than that.
Take a reference frame (call it frame A) where a hunk of diamond is motionless. Send a photon through the diamond from left to right. As it passes through the diamond, its average velocity will be 0.4 c to the right.
Now switch to a reference frame (frame B) where the diamond is moving to the left at 0.4 c. The average velocity of that photon, while it's inside the diamond, will be 0 in reference frame B.
The trick is that "average" is not the same as "instantaneous".
I will also point out that the speed of a wave is not always the same as the speed of the waves quanta.
One example would be a standing wave. A traveling wave has a specific speed (actually, several) that is determined by the frequency and wavelength of that wave. The speed of the quantum (i.e., particle) associated with that wave is sometimes associated with the speed of each anti-node. I haven't found the technical name for the speed of the node, but that is the speed most nonscientists would associate with the speed of a wave.
A standing wave can be made using the same frequency and wavelength. Each node in the standing wave has a speed of zero. However, the speed of the associated particle is still the speed of the standing wave.
This runs into problems of phase velocity, group velocity, energy velocity and signal velocity. Under the conditions of Ehrenfests theorem, the velocity of the particles is the group velocity. However, the group velocity is the same for standing waves and traveling waves. Sometimes all three velocities are different.
So really, the assumption made by the OP is not always valid. The photon does not necessarily move at 'c', the velocity of light in a vacuum. Furthermore, the photon does not have to always move in the same direction as the 'light wave'.
If the wavelength of the light wave is well defined as in a collimated and monochromatic plane wave, then the position of the photon is completely uncertain. Under this condition, the photon doesn't have a well defined 'speed' at all.
Einstein's 1905 article where he presented special relativity (SR) was not about photons. When he says light, he means classical electromagnetic waves in a vacuum. The motion of photons is a bit more complicated. Quantum mechanics had not been formulated yet. So bringing in photons when talking about Einstein's 1905 article is a bit misleading.
The local speed of light in a vacuum that Einstein was talking about is the phase velocity of the electromagnetic wave in a vacuum. However, photon-polariton of a certain energy in diamond won't have the same phase velocity as a photon of the same energy which exists in a vacuum.
Special relativity and quantum mechanics do not contradict each other. However, putting them together is tricky. So you have to be very careful about the word 'photon' when you talk about relativity. Better to talk about pulses of light than photons. At least when you talk about pulses of light, physicists know you are talking about wave packets. Photons are not always wave packets.
Combining general relativity and quantum mechanics is at present impossible. So I think one should be even more careful about the word 'graviton'.
! Citations to the scientific literature about "conservation of probability" would make it less a fantasy. A coherent or better a mathematical definition of "conservation of probability" would make it less a fantasy.