Nope, that's incorrect

Well, more or less. I just double-checked now on a K3 and a DX.
Holding down the power slider until the screen goes blank does indeed just put it to sleep, not turn it off.
But holding it longer makes it <strike>power down completely</strike> go into an unresponsive state and then, after a few seconds, reboot (complete with tree and index loading). I'm not sure what minimum amount of time you need to hold it down for, but I counted to 20.
Just thought to check the
DX user manual, and it says (p. 23) "If your Kindle does not power on or is unresponsive during use, try resetting the device by disconnecting your Kindle from any power source or USB port, and then sliding and holding the power switch for 15 seconds before releasing." (I assume they were distinguishing between "reset" and "factory reset".)
Not sure about all other models, but the
user guide for the Colorsoft says "If your Kindle does not power on or is unresponsive during use and you need to restart it, press and hold the Power button for 9 seconds until the Power dialog box displays and then tap Restart. If the Power dialog box does not display, press and hold the Power button for 30 seconds or until the LED light stops blinking."
ETA link to user guide