(9.47) The principal holders of Buddhadharma were said to be those who have attained nirvana, the Arhats;
But the Arhats that you proponents of things assert
Cannot be real Arhats because, according to your view,
Their minds still grasp at truly existent things.

It is important that we do not misinterpret these verses as a criticism of other traditions.  Anything that takes people in the direction of enlightenment is wonderful as far as we are concerned.  For us, since we understand that the ignorance of self-grasping is the root of samsara, it is only natural that the wisdom that realizes its emptiness is necessary for complete liberation.  We can encourage people in their own paths, in particular Christian ones, and perhaps later we can explain how to fully unite with God by realizing his emptiness.  But at the same time, we can have confidence that with the wisdom realizing emptiness, we can bring all of our suffering to an end. 

While understanding we do not criticize or undermine the faith in other people’s traditions, it is nonetheless helpful for ourselves to realize that even though this proponents of the lower schools or other religions are kindhearted and well intentioned, there is no actual liberation from samsara without realizing emptiness. This does not mean these other traditions cannot have their holy beings, it means that either their holy beings have not attained actual liberation from samsara despite thinking that they have, or that the followers of those holy beings do not understand the view that was taught by their holy beings.

In this context, the Hinayana scriptures were written by the Arhats, or those who have attained liberation. The Prasangikas agree that these Arhats did indeed attain liberation, therefore they must have realized the emptiness that is the lack of true existence of all phenomena. It is simply their followers who do not understand the final view realized by their own spiritual Masters.  

(9.48a) (Proponent of things) “They attained nirvana, or liberation, and became Arhats because they abandoned their delusions.”

The proponents of things say that the Arhats did attain liberation because they abandoned their delusions.  To attain liberation, we simply need to abandon our delusions. Therefore, they say we do not need to realize the emptiness the Prasangikas teach.

(9.48bcd) You seem to think that, simply by abandoning manifest delusions, one immediately becomes an Arhat;
But it is clear that even though a person might have temporarily abandoned manifest delusions,
Nevertheless, he or she still bears the karmic potentials to be reborn in samsara.

Shantideva agrees that it is possible to reduce all of our delusions other than the ignorance of self-grasping through the teachings of the lower schools. The people who follow these teachings will abandon their attachment, anger, jealousy, and so forth. And so externally it will appear as if they have no delusions. Shantideva is saying that is not enough. The reason why is such beings will still have on their mind the contaminated karmic tendencies to grasp at inherent existence and to generate all of the other types of delusions. And so while temporarily such beings may appear to not have any delusions, they still have on their mind the karmic seeds for generating future delusions, therefore they have not actually escaped from samsara.

According to the Prasangikas, our mind possesses two obstructions. The first is the delusion obstructions, the second is the obstructions to omniscience. Once we have removed the delusion obstructions from our mind, we attain individual liberation. Once we have removed both the delusion obstructions and the obstructions to omniscience, then we attain full enlightenment. The delusion obstructions are not simply manifest delusions arising in our mind. The delusion obstructions are the contaminated karmic tendencies on our mind to generate delusions. The result of following the teachings of the lower schools may lead to the temporary cessation of manifest delusions arising in our mind, but it is not sufficient to actually uproot and purify our mind of the delusion obstructions themselves. We can only do this by realizing the emptiness of our mind itself. Therefore, if we want to never generate delusions again and truly attain liberation from samsara, we must realize the emptiness that is the lack of true existence.