Brian,
Its an interesting essay, but I can not agree with your position
First, there are a couple confused issues here. It seems that you are starting out with the premise that hilbert space was proposed to be physical in the first place, which I would argue that is not in any way consistent with quantum mechanics to begin with, so its a false argument. Hilbert space is merely where the wave function resides, which itself is not a physically real entity in any correct interpretation of quantum mechanics.
The second issue is the cherry picking approach to the problem. On one hand you argue with getting rid of hilbert space, and on the other you argue that this isn't an essay against quantum mechanics. How can one not see that these are contradictory positions?
From the paper:
"If so, we're in trouble. Ignoring causality and the lack of materials, even if we filled up our entire Hubble volume, the whole visible universe, with our best classical storage device, we could only store the quantum state of a few hundred spins using this huge classical memory. Suddenly the illusory nature of
Hilbert space is brought into focus."
So the argument being presented is that we should somehow think that the universe should be confined into some classical computer? It is not the case that the universe needs to follow our prejudices. If anything this observation is an argument about the weaknesses of classical thinking.
If we follow the process outlined, it appears to be a discussion about decoherence, states are becoming less entangled as things become more course grained. However there is this point that is brought up:
"The idea of thinking like a quantum computer, that is thinking in terms of quantum processes and dynamics, is a powerful way to give a physically meaningful notion of quantum states. Hilbert space thus survives but only as a stage which is anyway mostly unused."
So the point is that Hilbert space is fundamental to how we describe processes, that we have difficulty in imagining how to model it is a secondary issue, but that we would bias our thinking is a risky proposition. One has to keep in mind that these issues of emergence have existed for a long time, and there has been an understanding that the dynamics that we associate with classical motion are not part of the wave function of a single particle, but are only apparent when there is a larger quantum apparatus (referred to as a "classical object" in the Quantum Mechanics text of Landau and Lifshitz).
That an apparatus is sometimes referred to as a classical object should not be seen as undermining the quantum nature of the larger system.
There is more discussion, to be had here, but giving up hilbert space is antithetical to the whole of QM.