I have a copy of the book. In fact, Ven. Dhammika generously gave it to me when I met him in Singapore in June/July. I had a nice chat with him. I've only read half of the book--got distracted by other stuff and never got round to finishing it. I more or less agree with what the others have said.
Based on what I've read, it can be seen in Ven. Dhammika's arguments that he is speaking from a perspective of modern liberalism. As I'm sure you are aware, liberalism (generally speaking) asserts that free persons act according to their own inner mandates, critically reflect on their own ideals, and resist blindly following social customs--particularly customs that reinforce authoritarianism.
Such an attitude permeates much of contemporary approaches to Buddhism. In fact, this attitude can be identified in many, many discussions here on DW and other forums. Ven. Dhammika comes from a cultural context that highly values such liberal social ideals. So it is not surprising that he gives emphasis to individual critical reflection and criticizes rigid traditionalism.
His book certainly reveals some pressing issues facing Theravada Buddhism as it moves from traditional contexts to modern ones. While he does make some good arguments that might appeal to our contemporary sensibilities, I don't think that he is suggesting that traditional forms of Buddhism are 'inferior' or 'backward'. As I see it, he is just pointing out that the conditions enabling those forms of Buddhism are passing away (or at least changing). A new set of conditions are arising in contemporary times. Hence, Buddhism needs to adapt itself to these shifting conditions.
If we read his arguments this way, the question of whether Buddhism is on the decline or on the rise, or if one form is inferior the other superior, becomes a moot point. It is rather a matter of how we recognise change and relate to it skillfully. Whether the solutions Ven. Dhammika offers would work or not, I cannot say. But he is at least drawing attention to some pressing issues or 'hindrances' facing contemporary Buddhism. As in meditation practice, the recognition of hindrances is an important first step before dealing with them.