Patrick O’Donnell, who also contributed to the Indian Philosophy blog, recently published an interesting response to the above argument, as found in this article by Gaston Dorren. Dorren’s main claim is:

While all disciplines attract the occasional eccentric, it seems that two fields exert a particularly strong pull: historiography and linguistics.

Now, it would be fine to say that many excentric thoughts have been uttered about languages wihout any basis. I would add that many excentric thoughts have been uttered also about many other topics, say ways to salvation, but less us live it aside.
The main point is that Dorren does not say that the topic of language, but that linguistics itself is “a magnet for dilettantes and crackpots”. You would think that Sanskrit authors working on language do not belong to either category, but here is all what Dorren has to say about them:

Other cultures were equally self-complacent. In the last centuries BCE, the people of North India felt that their Sanskrit was nothing less than divine, and 1,000 years later the Arabs would feel likewise about the language of the Quran. For the Chinese, civilising the neighbouring peoples was practically tantamount to familiarising them with the only great language. The French of the Enlightenment, not to be outdone, deemed their language better than divine – it was logical. […]
Speakers of big languages are not the only ones to get carried away by love for their lingo. Quite a few people in Tamil Nadu in South India used quite literally to consider the Tamil language a goddess, and some still do.

Look, I enjoyed Dorren’s discussion about how many people described their own language as the oldest or the best and I can see that in some cases these theories where the only ones about language in a given context. But it is hard to conclude from these wishful thinkings about Sanskrit to the conclusion that one can close the chapter of Indian linguistics (as a scholarly field) in this way.