It sounds like it might be clever, but then I realize I don't know what it means.
If you had values not in opposition to reality, then they wouldn't be relevant to reality, would they? Because in not opposing reality, they couldn't guide you in changing it.
The most you could really say about values being objectively wrong is if they are inconsistent and could not be fulfilled in reality in any possible universe. But what is a possible universe? And what if all value systems are impossible to completely fulfill?
It's quite clearly a scientism/superstition feud. Remember that Ireland was extremely Catholic at this point, and the guilt/purity psychology of that would pervade everything.
Wells is arguing that Joyce is being shocking for the sake of it in an internal struggle with his conservative values, while Wells sees himself as a scientific man "never been shocked to outcries by the existence of water closets and menstrual bandages".
If you had values not in opposition to reality, then they wouldn't be relevant to reality, would they? Because in not opposing reality, they couldn't guide you in changing it.
The most you could really say about values being objectively wrong is if they are inconsistent and could not be fulfilled in reality in any possible universe. But what is a possible universe? And what if all value systems are impossible to completely fulfill?