Well, I was right, there are holes (no prizes for making an obvious guess).
Isabel reports on it; I can't do better than direct you to her links, where Terry Tao and Alain Connes discuss problems.
Tao said: "It unfortunately seems that the decomposition claimed in equation (6.9) on page 20 of that paper is, in fact, impossible; it would endow the function h (which is holding the arithmetical information about the primes) with an extremely strong dilation symmetry which it does not actually obey. It seems that the author was relying on this symmetry to make the adelic Fourier transform far more powerful than it really ought to be for this problem."
Connes said: "I dont like to be too negative in my comments. Li's paper is an attempt to prove a variant of the global trace formula of my paper in Selecta. The "proof" is that of Theorem 7.3 page 29 in Li's paper, but I stopped reading it when I saw that he is extending the test function h from ideles to adeles by 0 outside ideles and then using Fourier transform (see page 31). This cannot work and ideles form a set of measure 0 inside adeles (unlike what happens when one only deals with finitely many places)."