I'm having difficulty understanding this. I'm not seeing why a 0 is necessary. Why can't any point be arbitrarily picked?
So the amount the reservoir is raised tells us how much pressure is exerted on the mercury and therefore the temperature?
Or are we using the ideal gas law somehow?
A 0 is necessary so the pre-calculation of the constant C can be made. If the same point is not used every time, the same constant C can't be used every time.
The system has a certain volume in the gas bulb, a certain mass of mercury, a certain n of gas molecules in the bulb, etc. Based on all of that, the 0 point is determined (exactly how, I don't know, but it would involved the ideal gas law and calculations).
Yes, the amount the reservoir is raised does tell you how much pressure is exerted on the mercury, and therefore the temperature. That is correct. The ideal gas law comes in in determining where, exactly, the 0 point is, which is already done for you so you don't need to worry about it.
Think about it this way: the ideal gas law is PV=nRT. n is fixed. R is fixed. Setting 0 at a single point that can be used consistently makes V fixed, meaning whenever the mercury is at the 0, the volume of the gas is x. This x is the same no matter what the pressure or temperature, so now V is fixed (as long as the mercury is at the 0). Since everything other than P and T are now fixed, the formula provided can now be used.
Another way to look at it based on the above: The formula T=Cp determines the temperature based on the pressure. The constant C is based (in part) on the volume of the gas when the mercury is at 0. You could use, say, the third line below 0 instead of 0, but that would require a different C.