This statement could actually be used just as easily against voting for representatives as we do today. The real question is do you trust public at large to make a better or worse opinion than <name your representative> on some issue you are deeply informed on? In other words the comparison should be versus the existing system as a whole, not versus an expert on a single topic.
My perception of the demagogue is that their power comes from railing against the current authority. So while I can agree that it seems likely that a 'true democracy' would instantly prop up the Becks and Palins of the country, who do they blame when a majority of people vote that they are wrong? Or maybe even more extreme who do they blame when their views and proposals are voted for but still fail?
There is no longer a 'bad guy' to blame and arguments put forth by a demagogue will have to deal with two new realities-
1- They can no longer claim they are part of the majority opinion in an effort to gain further support. It'd be hard for Sarah Palin to keep up her 'regular joe' persona and reconcile it with being in major disagreement with a majority of the country
2- They can no longer claim obstruction by some authority steam rolling them in legislature. It would become pointless to argue about which pundit supported which policy or law in the past, because every individual would have their personal voting record.