This argument applies only to Advaita and popular “we are all one” spirituality, not to Dvaita or the bhakti traditions, which keep a Creator-creature distinction and a real account of sin and grace. Isn’t Advaita being treated as if it were Hinduism?

Correct, and the scope is monist and pantheist forms of Hinduism and their popular Western descendants. The theistic Hindu schools would agree with much of this argument and use it against Advaita themselves; Madhva’s Dvaita is in part a sustained critique of exactly this problem. The Stanford entry also presents pantheist replies to the problem of evil (that evil is a privation, or a perspective-dependent feature of finite parts, as in Spinoza), which deserve a hearing before the Advaita levels reply in the next exhibit. Engaging the real internal debate is better than a flattened target.