The prediction context is somewhat different than the analysis context, I think. For predictive recommender systems, the most relevant part of this analysis is the critique of error measures. It may well be that MSE is not an error measure that aligns with the system's actual accuracy goals (e.g. something like perceived quality of the recommendations). When it comes down to it, the end goal is just to predict whethe…
#3: Suggest items that they are likely to really love.
This is subtly different than predicting what the user is most likely to like. To optimize with RMSE scoring, you are better off suggesting a sure "4" than a risky "5". For buying an expensive item like a car or a stereo, the safe bet might be a good approach. But for books, music, or movies --- easily sampled, one of a series --- I'd be much more excited by a system that can predict A+ items with even 25% probability than one that offers up straight B items with 80% consistency.