I guess I find this reply though eloquent, lacking. Ultimately, though his reasoning may differ, his conclusions are remarkably like those of evanstonjew. Essentially, it sounds like he is recommending a two fold approach for the Orthodox Jews:
1) If you are not already aware of all the issues, stay ignorant of them. Avoid looking into Biblical Scholarship, or Archaelogy, etc.
2) If you already have been exposed to it, then compartmentalize the two concerns, pretending that the conclusions of one have nothing to do with the other. His defense for this approach lies in noting that the halachic lifestyle is not directly dependent of the Torah.
So I wonder what his advice would be to potential Baalei T'shuva. In my mind they are the mirror images of the Orthodox skeptics. They too are in a state of cognitive dissonance and are attempting to resolve it. Would Kugel and evanstonjew and the rest of the advocates of compartmentalization advise them to not become observant and to continue to live as unobservant Jews?