First of all, I loved your article on Houston, and have even referenced it in previous threads in these forums.
That being said, you suffer from the common, among Libertarians or otherwise, confusion regarding the nature of the city. It is not a government. A government produces laws, which are rules that apply everywhere and to everyone. The rules that a city produces are quite specific to certain zones, hence the term zoning.
When arguing whether zoning is pro or con property rights, people miss an important realization. The city is a property in itself. It has its own property rights. A city is a property that emerges to supply to individuals goods that are geographically greater in area than a single lot. A road, for example, is a good shared by many buildings. It cannot be broken down into a share of road for each building. It must exist as whole or cease to function. Other environmental goods are much less tangible, such as having a street built entirely of beautiful houses.
The only Libertarian position on what cities should do is to say that they should have total liberty to regulate their own property and manage themselves, just like a house owner should have total liberty to regulate what goes on in his house. You betray the Libertarian ethic when you ask that governments impose Smart Growth regulations on municipalities, just as it would betray Libertarianism to ask that governments impose Smart Kitchen Layouts on private houses.
You are right to ask, however, why our kitchens are so ****ed up. The truth is that the reason that people confuse city and government is that government intervention into municipal affairs has completely corrupted their activities. What used to be private domains are now a corporate arm of state, whose constitutions are restricted to very narrow definitions. Cities are not free to organize themselves as they see fit. They cannot freely compete with one another. That is what Libertarians ought to be fighting for.
One cannot avoid the need for zoning or defining what purposes the city should seek, as you cannot in this new article. You demand smaller streets and smaller lot sizes, based on what principle? Based on your own preferences, nothing more. You have the right to express these preferences, as do others have the right to their own preferences. There is no right or wrong here. The wrong is the fact that our preferences have to be fought for in a political arena instead of being expressed in a free, competitive marketplace. That is what the Libertarian should be fighting for.
As you make evidently clear, sprawl is stopped by increasing the density of our cities. But knowing this is not sufficient to make it stop. The cities have to want to increase their density. That is not going to come true in the current order of things.
To get off on an admittedly theoretical tangent: I don't quite understand the analogy between cities and individuals. Under American law, city governments are creatures of state governments; they aren't sovereign, and would not exist unless states allowed them to. Similarly, cities' zoning power exists because of state enabling acts. By contrast, individuals can exist without state permission.