It's not surprising that in the current environment the NY Times obituary would characterize Illich's critique as "watered-down Marxism." In fact, Illich's critique is actually considerably more radical. Marx believed that once the expropriators were expropriated and the state withered away a worker's paradise would ensue. He didn't want to arrest industrialization, he wanted the workers to have control over their destiny. Illich thought the whole project was monstrous, no matter who owned or ran it.
Illich believed that the penetration of systems logic into the lifeworld had to be opposed on an individual basis. One way to do this was to engage in deep compassionate friendships. Another was to be sensitive to and eschew the kind of infernal comparisons technocrats make between people and technologies, i.e., that humans are systems consisting of software and hardware, inputs and outputs. As part of this, he also attacked the technocratic reconceptualization of mankind through new definitions of old words and their former meanings, e.g., the new notion of "life" as some general entity that can be nurtured on some general level, presumably by a technocrat or politician, i.e., the "culture of life." Rather he insisted that life is embodied in and inseparable from biological entities -- that there is no life, only lives. Illich also suggested reading history, especially the writings of key monastics from the 12th century, as a way to defamiliarize oneself the hegemonic power of the current version of "common sense" and so understand that other ways of living and interacting with each other and with the world were possible, and necessary. He sought by such readings to demonstrate that beyond a certain level of institutionalized expertise, most experts and their expert systems are actually counterproductive.
Illich's critique cannot be countenanced these days when the ideology of technical progress has so permeated us that the notion of organ repair kits (from our clones) seems like a good idea. It seems clear now that the desacralization of the lifeworld cannot be stopped. The spark of hope that it might was extinguished by the counterrevolution of the bosses in the mid-70s. The NY Times meekly fell back into line along with just about everyone else. Illich was a conscientious objector to modernism to the last, preferring to let a cancer on his jaw take his life slowly and painfully rather than surrender himself and his dignity to the anti-human ethos of the medico-technologico community.
IVAN ILLICH IN CONVERSATION is an excellent introduction to Illich's radical humanist perspective.