I think the mistake lies in the fact that when talking about a system "using free software", one needs to say which part of the system one is talking about.
In most cases, it is a statement about software running on the normal execution mode of the main CPU (but not the main CPU itself): this allows binary firmware just fine.
If one wishes to have "free software for everything", then that should apply to hardware too (and its hardware description language sources), since it has pretty much the same properties of software, at this level.
Hence, there is then no difference between closed-source hardware, or hardware with closed-source firmware.
Once one makes this distinction, the issue in the article becomes moot.