The statement is about the middle part of the paper, and yes it can not be say that it is an "argument", it is only something Penrose had in mind.
For any group G, if you look at the group as a manifold M, its set of isometries is usually controlled by the group GxG. The most simplest example is SU(2), which is the sphere S3, whose group of isometry is SU(2)xSU(2). I am not sure why it does not work for U(1), perhaps because it is abelian.
Now, I keep thinking that the answer is even more related to Angular Momentum. Perhaps the right question is "why SO(3)?" In a way, a SO(3) matrix keeps the information about cross products; the third column must be, I believe, the crossproduct of the first and second ones, must it? (this same trick is used sometimes to parametrize SU(3)). And in a generic SO(N) the Nth column could be defined probably as a function of the other N-1.
Well, the point is that if you want to carry "Generalised angular momentum" across the lines of the "G network", the only option that let's you codify it not only as a single (pseudo?)vector J but as a pair of vectors x,p is SO(3), or SU(2).