This is a good response, and I generally agree with your synopsis of what a good manager is.
One of the misconceptions about open allocation is that it's a "free-for-all". It's not. It's more like an applied research environment where people are free agents to some degree, but still are expected to follow-- to contribute to something sanctioned-- if they aren't ready to lead yet. Open allocation companies still fire people, but it's very rare, because "intrinsic low performers" (as opposed to people who lose motivation due to dysfunctional environments) also turn out to be very rare.
Open allocation doesn't mean, "You show up and do whatever you want." It means, "We expect you to contribute to the business but it's your right to choose how you do so."
My problem with traditional management is that old-style managers aren't really the leaders that the workers themselves would select, but puppet leaders, chosen from above. Also, when companies give managers the right to unilaterally fire people, or to damage their transfer packets through a globally-visible performance review system, they allow managers to turn into extortionists who force people into subordinating to the manager's career goals rather than doing what's best for the employee or the company. Since middle managers also get a lot of pressure from above in these sorts of companies, that's usually exactly what they become, not because they want to be extortionists but because their feet are to the fire as well.
I think that "management" as a cultural institution is archaic. Leadership, communication, and mentorship skills will always be in high demand, but that's not what a manager is. A manager, from the term's roots, is someone hired by an owner of recourses (capital) to maximally exploit them. People often get angry with their bosses when the manager ignores their career goals, but they shouldn't, because that manager is just doing his job. He works for the company, not the employee.
Managed environments lead to localism, by which I mean the extreme trust (e.g. the right to unilaterally fire people) placed in managers allow an environment where the manager's stated goals (which are often neither aligned with the corporate objective or the employee's needs, but the manager's career objectives) take priority. You have lots of indirection and wasted effort and, usually, morale problems as a result.
Open allocation, on the other hand, trusts people to work directly for the company. There are still leaders and followers, but the employees are implicitly trusted in deciding whom to follow.