"You would hardly believe this from reading this silly little book."
Have you actually read it? The length of this far-from-little book was one of the few things about it I found at all jarring, convinced as I was that it could have been condensed into something considerably smaller and still given readers essentially the same information.
"The author seems to suggest that because there are exceptions in English spelling, English speakers are illogical and incompetent."
I've heard that near enough all languages with a written form have exceptions in their spelling. The issue with English in respect of spelling is that because has a way-above-average number of spelling exceptions, problems caused by them are more apparent in our language than in most others.
"The author seeks to establish a phonetic system of spelling."
Not that all people who'd like to see English spelling updated agree with her, but Masha Bell appears to be in favour of not a complete, phonetic overhaul (giving our orthography one letter per sound, in other words), but rather a more moderate reform - one that would involve bringing divergent spellings into line with dominant patterns. Thus, if she had her way, I reckon some of the respellings would be less phonetic than their traditional ones - examples being words that don't have a magic "e" at the moment but would have if English spelling were modified to make it as she wanted it to be (if I'm not mistaken). For instance, it seems likely to me that she would like "rein" and "abseil" to be changed to "rane" and "absale" simply to make them more predictable for spellers and those learning English.
"She appears to have no knowledge of etymology and the importance of prefixes and suffixes in the development of spelling."
Depending on the nature of the reform (since, as you will have gathered, people who wish to see English spelling modernized are by no means unanimous on how it should be modernized), some respellings might reflect the words' origins better than their current spellings do. (One that comes to mind is "tongue", whose Old English spelling was "tunge" and which the majority of folks who don't like its current spelling would presumably like to see become "tung".) Furthermore, the systems desired by people eager for a comparatively mild reform of English spelling are bound to be ones that, for the most part, would leave prefixes and suffixes untouched.
"When faced with such a large language as English, it is inevitable that words can have more than one meaning. It can be helpful if they have different spellings. 'Ewe', 'you', and 'yew' are immediately obvious as different concepts... 'Vein', vain' and 'vane' are similarly distinguishable as different concepts but might all be reduced to 'vayn' or something equally inane under the proposed system."
Going by what I've seen in her writing, I think "vane" would be Masha's preference for these three words. However their spellings were conflated, though, very little if any confusion would result from it, just as "pound" having more than one meaning seldom or never causes someone to wonder if the word in written form (or spoken form, for that matter) refers to repeated heavy blows, an inclosure for stray animals or the main British unit of currency.
"The alternative 'u' is meaningless and ugly."
Such a spelling looks ugly to you (and to me, if I'm honest) only because it's not what you (and I) are accustomed to.
"This is a book which whinges that English spelling is difficult and then proposes something far less systematic, much more ugly..."
Again, ugly to us purely because it would be something new, something we weren't used to. Had we never known any form of written English other than the new system, we probably wouldn't find it ugly in the least.