I think the best argument against the rules is that they don't matter until the campaign has progressed a long ways. The theoretical balance doesn't matter, in other words, until the campaign is past 8th level. Given that plenty of campaigns don't get that far, it makes demihumans too good.
And when the party level gets over 8, the demihumans start to become too bad.
For levels 1 to ~7, demihumans have benefits with no penalties*
For levels ~8 to ~10, demihumans start to feel a penalty, as they start falling a level or two behind their human counterparts.
For levels ~11 and up, the demihuman penalty gets progressively worse, as they fall three, four, five, and more levels behind. Eventually, the demihumans are no longer in the same league as their human counterparts.
So the only time the level limit penalty for demihumans actually does its job (of being a penalty even roughly equal to the demihuman bonuses) is in levels ~8 to ~10.
* Some level limits are as low as 4th and 5th level, and some are as high as 10th and 11th. See my post on the 3rd? page.
Something I hadn't really thought about til now, is, apparently Gygax must have expected Players to regularly play characters up to the higher levels (beyond name level). Otherwise why have a penalty that doesn't come into effect till then? It's almost like he expected the middle levels (8-12) to be the most commonly played levels, and therefore the demihuman level limit penalty would be felt by those who chose non-human characters. Because the penalty is unfelt in the lower levels, and the penalty is too heavy at higher levels.
I'll have to look around and see if other rules support this "sweet spot" theory. (Nothing else comes to mind immediately, though.)
Quasqueton