Upfront, I'll say that I read Victorian novels almost exclusively. I'm a pair of spats and a chamber pot from my own case of consumption. Early in your essay, when you say that Modernists "were...the single greatest crop of writers the novel has ever seen" I reminded myself that I'm probably too close to this case, in the parlance of all those cop movies that are set three days before the lead cop's retirement; he will also say, at some point, "I'm too old for this shit" before doing something like chasing down a crazed East German bio-terrorist over rooftops or before donning hooker-drag to trap a weird cartel of Indonesian white-woman sex-slave traders.
But I digress.
However, later, you make this point: "The orderly, complacent, optimistic Victorian novel had nothing to say to them. Worse than nothing: it felt like a lie." I...don't recognize those Victorian novels you're referencing there. Not that there aren't orderly, complacent, and optimistic novels written during the Victorian era; however, the bulk of what's written in the nineteenth century is almost anything but the three adjectives you chose.
Orderly? Have you read Wilkie Collins? Complacent? Have you read Shirley? Optimistic? Have you read anything by Thomas Hardy or George Gissing? (Or, if you're going to ding me for both of those gentlemen being too far removed from the heart of the Victorian era -- and that would be a fine thing to ding me on -- I'll return that volley with Villette.) Heck, even reaching the end of Jane Austen's Mansfield Park (which, I know, isn't Victorian; it is, though, nineteenth century), one isn't left feeling terribly optimistic that the marriage between Fanny and Edmund is going to be a success.
It feels a little as if you're pitting the nineteenth century against the twentieth; however, I don't feel you make a compelling case of this. Put baldly, it seems as if you're saying that the Victorian novel is muzak to James Joyce's Beethoven.
I was also confused by this statement: "Say what you like about the works of Dickens and Thackeray, you pretty much always know who's talking, and when, and what they're talking about. The Modernists introduced us to the idea that reading could be work, and not common labor but the work of an intellectual elite, a highly trained coterie of professional aesthetic interpreters." Not knowing who's talking isn't an intellectual exercise when reading. It's a frustration. It would be like filming a movie with the lens cap on and calling it groundbreaking because the audience isn't sure who is doing what to whom.
I guess, ultimately, I disagree with your thesis -- that "plot" is a dirty word. It's what makes a novel readable. (And by the way, of those in your list of Modernist masterpieces -- i.e. The Age of Innocence, Ulysses, A Passage to India, Mrs. Dalloway, To the Lighthouse, Lady Chatterley's Lover, The Sun Also Rises, A Farewell to Arms, and The Sound and the Fury -- it's only the Woolfs that lack anything resembling plot. Even "The Sound and the Fury" is plotted as tightly as a Dickens novel.)
While I disagree with your thesis, I agree with your sentiment: Plot isn't a terrible thing, and we should expect more from novelists than blank experimentation.
(If you've read this far, thanks.)