I think the entire test is nonsense and proves nothing
Given that we now have a study which shows a very strong correlation between performance in the test and performance in reading at the end of KS1 it seems clear you are wrong.
I've know children who could read who have failed it
Often claimed by supporters of mixed methods. The evidence is that those children who "can read" who fail the test struggle as the vocabulary to which they are exposed increases. They don't have the tools to handle unfamiliar words. I struggle to see how a child can be classed as a good reader when they are unable to decode unfamiliar words.