Don't think about what letter starts the word, think about what SOUND starts the word. In the case of "hour," the "h" is silent and the first sound is "OW"--that's why we use "an" (because it starts with the sound of a vowel). In the case of "highly," we hear the consonant "h" sound at the beginning, so we use "a." Other examples of this are "herb" and "honor."

It looks like the newspaper made a mistake - we use "an" with words beginning with H only when the H is silent; that is, when the word starts with an open vowel sound. Why do we do this? Well, the words with a silent H are drawn from French, which doesn't pronounce H in speech. Note: for "herb", only use "an" if you don't pronounce the H. In places where we pronounce that H, we always write "a herb". In some older texts, you will see "an historic moment" or "an hilarious joke"... again, this is a throwback to rules governing the French silent H.

"An highly populated..." is wrong. An is used before A, E, I, O, or U. But there's also a special rule, an is also used when the "h" is silent, such as in "hour". So you would say "an hour", but not "an highly" because you pronounce the H in "highly"