What the author refers to are the three available compression modes on Xerox scanners, which are "normal", "higher", and "highest". It is not clear what that means exactly, but it is possible that all three of those are lossy compression modes.
In my opinion, the only reasonable mode for JBIG2 is lossless, as the lossy mode of JBIG2 is, in general, prone to these character mangling issues. File sizes for lossless JBIG2 compression are already very low, so I would claim that using lossless is almost always worth it, unless character mangling is explicitly not a problem.
