I see their point. I wouldn't hire a deaf person at my business where we can all hear. Why should they hire a hearing person at a deaf school?
She was deaf herself. They just didn't like the fact that she had learned to lip-read and grew up among hearing people, rather than being in a segregated environment where everybody communicates through ASL.
Meanwhile, Gallaudet still has "declining enrollments and low graduation rates" (from the article). They're probably declining because more forms of deafness are correctible, to some extent, and will become more so in the future; and refusing to be part of the non-deaf world could have something to do with the low graduation rates. Sounds like a bunch of thuggish "activist" types have taken over the place.