We report on high-resolution X-ray spectroscopy of the ultracompact X-ray binary pulsar 4U 1626−67 with Chandra/HETGS acquired in 2010, two years after the pulsar experienced a torque reversal. The well-known strong Ne and O emission lines with Keplerian profiles are shown to arise at the inner edge of the magnetically-truncated accretion disk. We exclude a photoionization model for these lines based on the absence of sharp radiative recombination continua. Instead, we show that the lines arise from a collisional plasma in the inner-disk atmosphere, with T ≃ 10 7 K and n e ∼ 10 17 cm −3 . We suggest that the lines are powered by X-ray heating of the optically-thick disk inner edge at normal incidence. Comparison of the line profiles in HETGS observations from 2000, 2003, and 2010 show that the inner disk radius decreased by a factor of two after the pulsar went from spin-down to spin-up, as predicted by magnetic accretion torque theory. The inner disk is well inside the corotaton radius during spin-up, and slightly beyond the corotation radius during spin-down. Based on the disk radius and accretion torque measured during steady spin-up, the pulsar's X-ray luminosity is (2.0 +0.2 −0.4 ) × 10 36 erg s −1 , yielding a source distance of 3.5 +0.2 −0.3 kpc. The mass accretion rate is an order of magnitude larger than expected from gravitational radiation reaction, possibly due to X-ray heating of the donor. The line profiles also indicate a binary inclination of 39 +20 −10 degrees, consistent with a ≃0.02 M ⊙ donor star. Our emission measure analysis favors a He white dwarf or a highly-evolved H-poor main sequence remnant for the donor star, rather than a C-O or O-Ne white dwarf. The measured Ne/O ratio is 0.46±0.14 by number. In an appendix, we show how to express the emission measure of a hydrogen-depleted collisional plasma without reference to a hydrogen number density.