An interesting and thoughtful analysis. Thank you.
I think the reason some people grew up with a misguided view of what the film is really like is because it exists in two versions - a PG rated cut, and the original 18 rated cut (that would be PG and R, if you're in the US). After the initial cinema run, throughout the 1980s, only the PG version was available in the UK, with the 18 version only released again on VHS in the early 1990s.
That at least partially explains why many in my generation have a misguided view of what Saturday Night Fever is really like (I grew up with the PG version, and was shocked when I saw the 18 version as an adult). However, even the PG version contains a lot of the content you describe in this article, with the attitudes it depicts inherent in the entire film.
John Badham made a number of enjoyable and entertaining films - Blue Thunder, Short Circuit, War Games, and Stakeout for instance - but Saturday Night Fever is much darker, deeper, and more provocative. For all it's deeply problematic and upsetting sequences, it is an important cultural artefect and the film he deserves to be remembered for, in my opinion.