I've seen dual licensing of software lots of times before. Though most of the ones that come to mind are "GPL, but if you don't want to have to GPL the code you're linking to it, you'll have to buy a commercial license for this", not "GPL only under these conditions."
I think this is the intent of the linked project. The wording is wrong; you can't say "GPL except for commercial products" but I think he intends to use the word "commercial" to mean "proprietary", in which case it works.
It's unfortunate because there are tons of commercial products that use the GPL (including my own product), and this perpetuates the old tired trope that libre licenses don't work on products you pay for. But my suspicion is that it's just sloppy wording rather than attempting to add an invalid clause to the GPL.
GPLv3 has a interesting hack in which it says you can ignore additional restrictions. DonglePi was gplv2, so it is sadly not applicable in this case but it would had made things interesting.
