Total cost?
 

If I am reading this correctly, I have to buy a subscription to HLO, then buy each licensed book in here to make full use of it? Am I correct? Or do I buy the books for offline use? Am I really looking at the monthly cost plus at least $25 just to use this?

Yes & No. You can pay a $10 Standard subscription for 6 months to access the online service, plus the $25 base price for a game system. You buy game systems/packages separately - exactly the same way it worked under Classic. [Actually, if you didn't already have HL classic, you'd pay $35 for HL and one game system.] Yes, its a subscription, but it's not expensive compared to nearly anything. HLO won't let you change or level up characters offline.
HLO FAQ

The subscription fee covers LoneWolf's cost for server maintenance, and is cheap.

The $$ for the game system and for the source materials covers their much more expensive labor costs for getting all of that material coded for HLO.

As Dami pointed out, it's exactly the same structure they have for HLC (where one pays for the core game system, and then buys add ons for that system separately. They just added a minimal subscription cost to maintain the servers.