This seems like a fairly extreme interpretation of 'processing' - I haven't seen anything that suggests there's a nutritional difference between steel cut, rolled, or quick oats. Human beings have 'processed' their foods along these lines for more than 10,000 years, as opposed to say, making Twinkies.
I think in the oats case not much happens nutritionally until it gets to the cheeri o's stage of processing. The only thing I could think of that steal cut might do is remove some of the fiber when the shell falls off.
