I'm not the author. I think you've hit on the main limitations, but I don't think it's fatal. If the lay of the land in a given field is such that there are well defined camps, then you allocate the money to each camp[0] and allow the camps to allocate the money internally. If the lay of the land is that it's diffuse and has very shifting structure, then you can't follow this strategy, but also it's maybe worth raising the possibility that it's not yet time to allocate money and the first thing the field should do is try to develop some structure.

[0] Obviously the problem of what %age to give to each camp is an important second-order problem, but if you imagine a scenario like a university, I find it more likely the Provost's office can figure out how much to give to which Dean than they to be able to figure out how much to give to which lab.

(I also think you're right to observe that even within a particular camp of a particular field there will be relationship-driven gladhanding that helps determine the flow of money, and that's a real concern, but it's just a more localized concern than I think you give it credit for. I'm also not entirely sold on it.)