Well, first of all, the article said that the scientists "also" registered concerns about the dust thing, not that they "only" registered concerns about it. For all we know, they were concerned about the danger to human life as well. I'm not sure your interpretation is justified.

Second, how did you get your headline about Sagan advising them to nuke the moon? All the article says is that Sagan did some calculations for them as part of the planning. Sounds more likely that he was part of a team contracted to look at the feasibility, since he was "a young graduate student". The article says that his calculations were related to the release of dust and gas, not that he was the chief proponent (or even a proponent) of the project. So I'm not sure how you go from there to Sagan advising the military to nuke the moon. Advising them on some of the potential consequences of nuking the moon, it rather sounds like.