Does Income Inequality Matter?
The question isn't whether we want a society of perfect equality. As you mention, inequality can promote competition, incentives, and other 'good' things.
(And on a nit-picky note, those four points are less 'fundamental flaws' than basic assumptions of generalization. More importantly, the phrasing of those points draw false dichotomies and straw-men; i.e. the argument isn't that obscene CEO bonuses 'lower' employee salary, only that they're excessive, obscene, unearned, and could be better spent elsewhere. Characterizing the argument against such bonuses as 'they lower employee salary' is false and logically flawed, though rhetorically successful on quick reading.)
However, that's not the question.
The question is the degree of inequality. Given that some inequality is a good thing, the argument here is that too much inequality is a bad thing. A little bit gives incentives to work hard and be creative and develop new things. Too much inequality gives absurd rewards for small gains, while others who work hard may get very little. The dividing line seems to become somewhat arbitrary (why is the work this CEO does *so* much more valuable than the work done by one of his employees?). And this arbitrariness, combined with extreme poverty and extreme wealth, can lead to frustration, violence, and various other *really* bad things.
While all of the points you summarized may be true in abstract, I've yet to see that argument made with the realities currently faced.