Former Pilot Here
I flew commercially for a few years for a charter airline, before I moved on to less frustrating and more profitable things. I still keep a licence and medical but no longer fly.
First off, I should note that the report in question is not an FAA report, but a US DoT report (that's the FAA's bosses) and it is not a technical report but one intended for consumption by laymen, most likely politicians.
In other words, it's a political (not policy) report.
And it does start off on the wrong foot, by jumping to conclusions, as it is clear from the introduction, where it says: "pilots who typically fly with automation can make errors when confronted with an unexpected event or transitioning to manual
flying.", citing the specific incident of Asiana 214. Now, in a footnote to that bold, if tautologically true, affirmation it is stated that:
The National Transportation Safety Board (NTSB) determined that the crew did not appropriately understand the aircraft’s automation systems, allowed airspeed to decay due to improper monitoring, and failed to perform a proper go-around response.
In other words, the crew got in trouble because they did not understand the automatics (and screwed up the go-around to boot). A more logical conclusion to take from that is that the crew need to spend more time learning the automatics, not less!
As for manual flying: that's the way most of us were first taught how to fly, usually in a heap of aluminium and dirt that had no automation at all in the first place. It is great fun, gives you that feeling of being in control, and you can daydream of being one of those aviation pioneers flying around with a big grin and teeth full of bugs. It is also a terrible way to train for airline flying.
Manual flying is what you do when you've got no better choice, e.g., when the autopilot gives up the ghost (which does happen often enough). You can still dispatch with autopilot and/or autothrotle inop (but on my aircraft, not with a blocked toilet). And sometimes, of course, they decide to pack up in the middle of the flight.
However, manual flying is not in general a good idea in airline operations. For a start the boss won't like it because of the higher fuel consumption (turns out we humans are not as efficient as machines when it comes to monotonous, precision tasks). It is also more risky, as it requires attention which could be better directed to planning and monitoring, rather than just doing. Mental capacity is limited and easily subject to overload in a highly dynamic situation such as flying.
Also, there is very little to be gained, in terms of skills or practice, by disengaging the automation during the cruise. The only real opportunity to hone one's manual flying skills is during take-offs, approaches, and landings (and go arounds :) ), and except for approaches the other two are always hand flown anyway (most aircraft are not autoland capable, neither is it possible nor convenient to use it for most landings). It is true that some people will engage the autopilot as soon as they passed the 500 ft mark or whatever the company's AOM says, even on an easy day with good weather and no traffic or other pressures, when you could just hand-fly the departure all the way out instead--I'm all for encouraging those pilots to take the opportunity and hand fly those when they can, and same for taking visual approaches when you're coming into a remote airport on a nice day, but at the same time one has to know the aircraft systems (including automation) like the palm of one's hand, to the point where it pretty much becomes an extension of one's mind. If you know your systems well enough, you end up developing a feel for it and will be able to sense when something goes wrong before you become consciously aware of it, while at the same time take a much more strategic approach to flying. To put an actual example, it is no good to end up short of fuel past your PSR (point of safe return) because you were too busy trying to coax the aircraft into maintaining your assigned level and forgot to check the fuel.
In conclusion, automation is great: it saves money and it saves lives. But we have to be proficient in it, know how to use it and understand its capabilities and limitations. We also of course need to know how to fly without it, but at least in my opinion that supposed loss of manual handling proficiency is more imagined than real, and in any event, most accidents are caused by a series of bad decisions rather than bad execution of a good decision. Including Asiana 214.