I’ll have to read Lurie again. (I don’t want to, because it’s maddening and frustrating to wade through that prose.) Without reading that article you linked to and speaking from a recollection of what Lurie was trying to say (as I said, it’s maddening), Lurie’s point seems to be that Japanese didn’t start out as 音 and 訓, or at least, he opposes the ‘bilingual hypothesis’ that identifies the Chinese component as originally foreign words. The Japanese concept of writing didn’t start out from the idea that Chinese was a foreign language, as opposed to their own native language. Writing was just… writing, and different modes were mixed together almost indiscriminately. The on/kun thing came much, much later. Sorry, I can’t articulate it now, and I’m too pressed for time to sit down and give it the time it needs. Anyway, the guy is groping after something, but he isn’t quite there yet.
I wrote my own summary of my understanding of how hanzi/kanji are used at my website, http://www.cjvlang.com, but that was written a long time ago and is pretty elementary. Part of the complexity comes from the Chinese side itself, which is not as straightforward as it seems.
Recently I read an extended quote from 岡田英弘 at a Japanese blog (which I depressingly don’t seem to have kept) which put forward the rather breathtaking hypothesis that Japanese was ‘created’ by kanji. That is, he believes that the Japanese language was created when people came up with Japanese readings for kanji. It was totally wacky, but on the other hand, the idea that the Japanese language was somehow moulded around kanji (by assigning kun-yomi to kanji) is an interesting one. If I find the quote I’ll let you know.
Good luck with your dissertation!