Also, doesn't this text dismiss LVB as a towering genius of composition, but a merely adequate orchestrator? What to make of this perspective?
Korsakov refers to a "brilliant" type of orchestration which indeed was the future of the art. He dismisses LvB because he didn't practice that particular approach. The orchestra was expanding and instruments were being improved which allowed for this. However, the new approach also was about a new style of music as well (i.e. Beethoven said what he wanted to say the way he wanted to and his orchestration is not a limited expression but a wonder of the art.) Also the limitations Korsakov refers to are in a few very specific areas thus LvB's string writing for example couldn't have gone out of vogue since they remained the same instruments technically - basically.
That's why criticsm of Beethoven's orchestration begins and ends with Korsakov and all modern orchestration books are loaded up with examples of LvB. He is as good an orchestrator as ever picked up the pen.