Maybe I'm remembering wrong, but it seems obvious to me too that Oro was talking about Edo Tensei.
As for the episode, I have to say that I was disappointed with Kabuto's performance in that fight. I expected more out of him. He seems like such a cool character.
Also, was anybody else disappointed by Jiraiya's demonstration of the new jutsu? Except for the possibility that it doesn't drain energy quite so much, Chidori looks way better. It took a couple seconds just to grind through the tree. I was hoping that Jiraiya was show a huge chakra ball and blast something, thereby demonstrating its superiority to the lightning edge.
btw, it's looking more and more like this move would be awesome for someone like Neji who's already shown great control and production of chakra.