I understand both of your arguments. In the end I hate whiteboarding problems, because I don't really need to know all of the potential problems in detail, but a certain interest for why some algorithm is faster than another IS indeed helpful when programming fast applications.
I have done some optimizations in the past, and I think what the author is getting at, is that it's not too late to learn about the specific niche algorithm you're dealing with when you have it in front of you.
My favorite rule about optimization is one I learned from a former colleague. First you measure, then you find where you should look, then you optimize. Without measurements you're maybe doing more harm than good. And if you look up different solutions when you know what you're trying to optimize it's usually not that hard to find a better replacement. But you don't need to have the exact solution in your head for this.
What you do need is the rough cursory knowledge of algorithms that grants you the ability to see more quickly where you're losing precious cycles. E.g. knowing the tradeoffs between linked lists and vectors.
I've seen way to many tools that could be sped up by a factor of 30-100 in an afternoon, that I really have to agree with you that a lot of people don't know their craft. I just don't think rote memorization of algorithms Q&A is solving any of this. Take home exams IMHO are a much better measure. I can ask people why they chose a certain data structure, why they didn't do it another way (if I have an idea of what could be better). That gives me much more of an insight in how people think. Not how well they memorize things.