Maybe Egypt is isolated and wants to avoid military conflict, but it's hard to imagine a public works project that is more catastrophically vulnerable to really low-tech attack than a giant concrete dam. If Egypt played its cards right and got the Ethiopians or Sudanese to strike first, it could solve this problem in a moment, all by itself, possibly while plausibly denying its own role in the disaster. The Sudanese would be upset to find half the buildings in Khartoum floating in Lake Nasser, but they'd sure hesitate to support a rebuild.
I think the idea is not to go to war. Say Egypt wins...and what do you do ? No major country will stand a such invasion. Taking out a damn is almost certainly a war crime and should be considered like a nuke, the last option. Imagine the wall of water wreaking havoc tens of miles away, village after village, town after town. Egypt lost when they couldn't stop it.
It could be argued that Egypt "lost" when Mubarak destroyed the agricultural sector, to the extent that the Gift of the Nile now requires food aid. That may be why there isn't a constituency for really opposing the new dam. If there were, however, there are enough violent gangs in the region that dams can be attacked without leaving obvious fingerprints. Who's to say the dam hasn't already been attacked, by a subtle sort of supply sabotage? For the reasons you cite, if the dam comes down, it won't be rebuilt. The point is that giant dams are uniquely vulnerable to veto by theoretically unrepresented parties.
It's worth noting that the Nile is one of just 10 rivers which outputs 90% of the plastic that goes into the ocean. Some of the agricultural problems could be related to things such as that.
Mostly it was Mubarak implementing a bizarre corrupt version of land reform that took land from farmers whose families had owned it back to antiquity and gave it to cronies with no farming experience. [0]
The author did not mention that other Nile basin countries are planning to build their own dams on the White Nile for irrigation purposes and power generation. So the amount of water that will reach Egypt in a few decades from now will be vastly smaller than today.
Just for reference, the Hala’ib triangle is in the South-East corner of Egypt, not the South-West.