I believe that the reason your calculation of the volume of material moved is only half of the minimum figure estimated by Mr. Croyle is because you assumed a square-cut channel, cut "to size", while he probably assumed that the sides would be sloped back to some stable configuration. Still, though I'm not disputing your conclusion that a huge amount of material will be moved, I will nit-pick your methodology a little bit.

Your assumption that loose-dumped sand in a truck box weighs 2.2 tons per cubic yard, which works out to 163 pounds per cubic foot, is awfully generous. I started out planning an explanation why sand's density in a loose-dumped condition would be around 100 to 120 pounds per cubic foot (1.3 to 1.6 tons per cubic yard), depending on the water content, but on seeing that, people would just roll their eyes. So check this out:

http://scruggscompany.com/resources/conversions-calculators/
This was in pretty close agreement with a handful of other references I found, and to put it in the same units that you used, this equals 1.35 tons per cubic yard.

The material at the Oroville site is mostly rock, so here's a more applicable generalization:

http://petelien.com/21-crushed-faqs/50-how-many-tons-of-riprap-are-in-one-cubic-yard
Not all rock has the same density, of course, but it will generally have a specific gravity ranging from 2.65 to 2.7, so this site's figures are probably "close enough". The in-situ density that they cite for limestone is for undisturbed bedrock, and in my experience, I would say that their generalization regarding the proportion of voids in loose rock and the resulting density of 150 pounds per cubic foot is high, and lower densities would not be unusual. However, if we go with 150 pounds per cubic foot, that's 2.0 tons per cubic yard, so even though your sand-density estimate was far too high for that material, it wasn't far off from this figure for loose rock. Using your overall volume and 20 tons per load, that works out to being 25,000 truckloads, which is not an overwhelming difference from the 27,500 loads you calculated, and like I said, I don't dispute that this is basically a huge undertaking!

For those really interested in the picturing this in terms of the number of truckloads, if they move the material somewhere nearby, they'll most likely use off-road trucks, which are loaded "heaping-full" without regard to the weight carried. These trucks carry more than a quad-axle dump truck, but for estimating the actual number of loads I don't know a reasonable conversion. It's "a lot of material" either way!