I actually agree with your nemesis. Exhausting a horse does absolutely nothing. It certainly isn't disciplinary, it solves no training problems, and it definitely doesn't make a horse less likely to act out or be dangerous under saddle.
Oh, I'm t talking about exhausting a horse at all! I'm talking about excercising a horse, I find lunge work can be quite strenuous for horse and lunger as it requires you to ride from the ground so to speak. Its a good way to see your horse move from the ground, teaching your horse respect from the ground and also, if you have a hangover, you don't feel so ill from sitting trot. When you're spinning too fast, stop and close your eyes!
It depends how you lunge, if you lunge as working, then your horse has to listen and you can get a lot of respect from them, so I believe it does make them less dangerous. If you tie a piece of rope to them, and let them run in circles, its pointless.
It did help one training problem with mine. Walking. We had a few transition problems from trot to walk under saddle (but really mum, I want to carry on trotting I can do it so prettily!) and lunging her with vocal commands helped that and also with teaching her canter under saddle. Used correctly, lunging is a great tool, but I'm going off topic.
This is about us being cruel by sweating.