The road congestion theory is a backwards rational -- someone was trying to come with reason for why medallions should still exist and came up with it. There's no way that anyone in 1937 had congestion in mind when they were creating the taxi medallions; to call it a "major" reason for why tax medallions were created is completely absurd.
To cite road congestion as being part of the "spirit" of why taxi medallions were created leaves me with the impression of someone being disingenuous.
> There's no way that anyone in 1937 had congestion in mind when they were creating the taxi medallions
What on earth makes you assert this? The intense and (to modern eyes) borderline insane levels of traffic congestion in NYC at the dawn of the automobile age are very well documented. There are pictures and videos you can easily find, that make today's horrible congestion look bearable and civilized. A lot of traffic rules and devices have their dawn in the same era.
I think that pricing congestion directly would be better, but in the absence of that, this is an example of Uber hurting some citizens who are not taxi companies.