Hi Michael,
I'm not sure what point they're making there in the film, I assume they mean that crediting questionable undervotes (much more questionable than a ballot where someone votes for Gore and then additionally writes in "Gore") would have resulted in a lead for Bush. But I can answer the part about the headlines. I was following the Florida media consortium vote count quite closely as a good friend writes for one of the papers and was a 'counter' on the story for several grueling months.
The headlines completely distorted what the count actually found, which was that in the statewide recount, Gore won. Of course, it would not do to make that the headline. What the papers emphasized in their headlines was that if the four counties--was it?--had been recounted, as the Gore camp wanted, Bush still would've been reckoned to have had more votes, using the counting standards used during the (halted) recount. Hence the "Recounts would have favored Bush." Much later in their articles the newspapers let slip the little bit of data that well, Gore did get more votes, although it was still unbelievably close.
This might not make sense on the face of it, weren't those the disputed counties? But the discrepancy is partly due to much higher counts for Gore in several central Florida counties which were not recounted until the newspapers did the count.
The film-makers are critical of the Gore strategy, and that's the point they're driving at--that his opportunist 'just recount four counties' made him not only vulnerable legally, it was a losing strategy practically, and bankrupt ethically. (The demonstrations I went to were not unified on the question, although the poignant, 'this is America, count every vote' was predominant.)
Jenny Brown