Wow, this has been an immensely fascinating discussion. This is one of the most in-depth analyses I've ever read of the WH/KL debate, and also one of the most diplomatically handled debates I've ever read on any forum, anywhere.
My thoughts:
I loved Past Watchful Dragons. I'm shocked that so many people have bad vibes about Walter Hooper. He was in a Lewis documentary a few years ago (The Magic Never Ends, perhaps?) and he seemed like the nicest old fellow to me. Of course, appearances can be decieving--but I'm shocked that people are rubbed the wrong way by him at first glance.
Anyway, I never read Lindsoog's book, so I won't pretend to understand all of her arguments. But either she posted here at one point, or someone quoted something from one of her books at one point. So I'll comment on that which I know.
The thrust of Lindsoog's argument seemed to be: "This can't be Lewis' writing, because it's no good. And it differs from other things that Lewis had done before." Those, to me, seem the two strongest arguments in
favor of the authenticity of the works.
Here's what I mean: if DT is no good, nothing more than that lends credence to the theory that Lewis didn't like it himself, and stuffed it in a drawer and abandoned it. Also, a Lewis forger would want to use as many familiar ideas and settings to copy the Lewis style as possible. The fact that DT does differ from other things that Lewis did before, and strongly at times, seems to indicate that Lewis was trying to experiment with new ideas, as he always did. The forger's problem would be that he emulated too many Lewis cliches, not that he pursued too many new directions.
For that matter, if someone else forged this, why not just finish the story? If you're going to forge a "lost" story, why not finish the thing and give the audience some feeling of satisfaction? This fragment seems to indicate that Lewis simply lost his way on that story.
As someone else noted, it makes no sense to say that Lewis would not have made himself a main character, since he inserted himself in other ways into the other space books, and since Ransom himself is only a supporting character in THS. Obviously, Lewis liked the shifting perspectives in his space stories.
So, that's my opinion, and I'm sticking to it, until/unless some more pressing evidence presents itself.
Incidentally, if Lewis did write this, I would have been very happy to read more, if he could have gotten past his writer's block. The scene with the first glimpse of the Stingingmen is as creepy and nightmarish as Jane's dreams in THS, or the Dark Island in VDT. It's Lewis (assuming it's him) at his best.