No, the reset button isn't a 'factory reset'. A 'factory reset' overwrites the CCF with the default factory one, clearing out any changes you've made. Not what you want to happen every time a reset is necessary.

However, many things are checksummed when Pronto is reset to check everything is right in its little world. If something isn't, you'll get a dialog and the unit will do a 'factory reset'. If things are so bad that that mechanism doesn't work, the unit will have to be exchanged. Hasn't happened yet, to my knowledge. Should be an extremely rare occurance (I've learnt not to say something will never happen :-)

Shorting the battery terminals just makes sure you get an honest-to-goodness power on reset, it doesn't cause a 'factory reset'. Otherwise there would be a danger of losing your settings when you changed the batteries - and what would have been the point of using flash memory? :-)