Nah, it's not that. I see reference to the inductor being wound on an iron rod core, which is already a little disturbing as that will saturate quite easily under transient conditions. So the inductance value will change, but not by orders of magnitude, maybe only 1/2 to 1/4, still leaving a lot of inductance left to drop the transient voltage across.
Now, if it were made on a conventional transformer core, the saturation ratio would be huge, and it wouldn't work very well at all!
You could put a saturable core in parallel with the mains, so that when a huge gulp of flux is delivered (such as from lightning!), it saturates the core. The leading edge is still let through, but that can perhaps be filtered away without too much trouble. You still need the series inductors, which increase the transient impedance of the mains supply. Maximum clamping ratio is simply an inductor divider: series inductor over saturated inductor. So it's still not all that great.
Just a plain old conventional transformer, does a pretty good job at this, actually. The poor leakage of a bank-wound transformer is an advantage here, because the leakage acts as the series inductor, and the secondary is more effectively shorted out by the saturated core.
Tim