I generally agree with Chomsky here. What he is saying is that most people who so ardently oppose government are opposing it for the wrong reason (for a better/more extreme example of this, see the tea party movement - I think that most Ron Paul supporters are actually closer to Chomsky that he realizes). In other words, Chomsky has just as much disdain for the federal government as most right-wing libertarians, but for different reasons. For example, he hates the government:
Not because of taxes, per se, but because the taxes are spent for the benefit of a small, tyrannical, ruling elite instead of for more general purposes that benefit all. (not that "no taxes at all" wouldn't be ideal - he is an anarchist, after all, but he also realizes that anarchism isn't something that is right around the corner, unlike many idealists).
Not because of regulation, per se, but because regulation (like all government policies) are written by and enforced on the behalf of the economically-powerful and not the common person. Remember, if a particular economic class (as a purely hypothetical example, say the top 1% who have controlled the wealth and politics of a nation for centuries) is allowed to simply run nilly-willy with all of their special privileges, they will end up fucking a lot of shit up. There are two things to do: eliminate their privileges (intelligent/strategic free market reforms), and/or curtail their the power they've already accumulated (regulation). It's the same reason that no true libertarian should be automatically opposed to regulations which tie the hands of banks who are members of the Federal Reserve system - with all of the privileges they have been granted by the state, it is reasonable to expect some basic limitations on that power.
The primary problem, as Chomsky argues, is that these limitations of corporate power, these regulations, and these tax policies, etc are promulgated by an undemocratic system - that is, a system wherein the masses, the common people, are not in charge. I think we should all be able to agree that that is the case. But if "the people" (who the Constitution claims are directing affairs) were to, say, tax corporate welfare recipients harder, or regulate the banks in such a way to negate the bullshit mortgages they claim to hold - that would be a form of taxation or regulation that libertarians should support although as merely an intermediate and temporary step. The long term goal is still the abolition of the state (and/or local/direct government), but if a step in that direction is a democratization of the system we ought not to oppose the reaping what has been sown; to relinquish (and distribute back to a truly free market), by the hands of the state, that power which has been bestowed, through the power of the state (over many centuries)to the few corporatist, even though they will suddenly become the most ardent supporters of "the free market" in an attempt to protect their privileged position (see: Wall Street CEO's arguing about the sanctity of contracts with respect to their bonuses).
Revolution is a complicated thing, and there are certainly valid differences of opinion on the question of strategy. My main departure from Chomsky is that I believe that the revolution will be far underway before the political realm can even reform itself to the point at which it might be called "democratic."