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Simple examples can be constructed showing that nonlinearity is required for certain problems.

There do exist non-linear optical components, so I assume that could be used for a piece of followup work...

True, but all the nonlinear optical effects I'm aware of only really start to matter at very high intensities - so wouldn't really be applicable to the kinds of scenarios they envision, like directly feeding it images seen from ambient light.

Uhm, speed of light differences in a modified crystal lattice are constant nonlinearities reasonable to produce. They do not need high intensity light, but they would need additional circuitry for scaling. Plus the network would have to work on phase angle and not magnitude. Mostly Kerr effect (high voltage) and cross wave polarization (e.g. given Pockel's cell) are useful there.

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