Diabetic nephropathy is a complicated issue. I wasn't able to access the article you attached, but would like to point to Dr. Bernstein himself as an example. He is a type 1 diabetic himself who was beginning to develop diabetic complications when he began experimenting with low carbing as a means to control his diabetes 40+ years ago. Not only have his kidneys not failed (nor those of any of his patients that I'm aware of), but they have actually gotten better.
As I understand it, it's not dietary protein that causes the intial kidney damage in diabetics, it's chronically elevated blood sugars which are usually less well controlled in type 1 diabetics than in type 2 (much wider and larger fluctuations) which would go a long ways towards explaining why type 1 diabetics suffer end stage renal disease more than type 2's. The current dietary recommendations for diabetics are far too liberal on carbs which contribute to wide swings in blood glucose. Blood glucose attaches itself to small protein molecules that would normally be too large to fit through the glomerulus of the kidney (the filtering mechanism), but when blood glucose rises the body tries to get rid of the excess through the kidneys. The protein/glucose complex is too large to fit, but the pressure building up behind it from blood can force it through the small pores beginning the damage. As this happens over and over, the damage increases and albumin begins to leak through the glomerulus (a condition known as albuminurea) which is the first sign of kidney damage.
Dr. Bernstein doesn't feel that type 1 diabetics should refrain from a low carb WOE and I agree. The best way to prevent kidney damage is tight blood sugar control, not dietary protein restrictions. Once kidney damage has progressed to a certain stage, then dietary restriction of protein may become necessary.