You are a brave one! I just looked up some information about this book and your specific pattern. Amazon has reviews of the book and everyone says it is full of errors. We (DH was helping me) also found a picture on a blog of someone's finished shawl. I have to admit I find it very interesting. It looks doable. I hope you're not encountering a lot of mistakes.
I have never seen anything that had directions like you gave, but I tried it out and it works. And after looking at the picture I can see what is going on. It looks like you must make two of these cable sections and then sew them together and pick up for the neck edge.
Okay. You let the first 2 stitches come off your needle and pull the working yarn out of them and go ahead and bind off the 12 stitches. When you have 2 stitches left on the LH needle cut the yarn and end off. Let those last 2 fall off the needle. Then you will pull on the strands between each stitch (of the 2) with something like the tip of your knitting needle, unknitting each stitch. When you have pulled the last row of knitting out this way you will get a loop that extends from the edge of the work. Keep pulling each row out adding loops all along the edge, until you get clear down to the cast on row. (If you do this between sections of knitting you get laddering, like a bad run in a knit item. But along the edge like this it is different. No real ladder.) You can't undo too much down at the cast on edge. It will stop where it needs to.
Those next instructions had me going.
Cut the center of each loop and tie the two ends together.
What? But after seeing the picture and trying a little swatch of this I get it. All those loops you got along the side....you cut each one right in the middle and tie the resulting two ends of each loop. I take it that you want your knot down at the edge of the work so that the two ends stick up like the fringe sticking out all over on the shawl.
This is a very interesting item. Be sure to post a picture here in the gallery for us when you get it finished. Do they wear stuff like this there in Mansfield? :-) I like it, but have to admit I am too old and not the right style to pull this off. LOL