He's not smug at all. Part of the article was from the final press conference. And in that conference by the way he gave Djokovic plenty of credit as well. He also felt (like I do) that Djokovic played better at Hamburg last year. It's not smug to know when you are playing worse than you're capable of. He knows Djokovic is a great clay court player and frankly he has seen Djokovic play better than what he played in Monte Carlo. Novak played really well, of course, but it was obvious to anyone who watches Rafa that he wasn't playing his best yet. His second serve sucked and he was broken not simply because of his opponent's skill, but his errors as well. His errors to winners ratio while positive was not as good as it is can be on clay.
First bolded part:
He was answering a question that specifically asked him what to improve.
I'm not sure where the second bolded part came from, but in no way does that indicate that he is smug or didn't give anyone credit. I don't know how one can come to that conclusion based on two snippets. In fact the second bolded part, he is saying that at his current level he feels that he has to improve so he would have his chances. I think that is giving his opponents credit than taking it away. He feels that they are capable of more and he has to do more to counter that.
Uncle Tony is just a hard nosed coach. Rafa does love to compete and I have also read that he loves the competition more than the game, but I don't think it means that he doesn't love the game. Just because you love to compete doesn't mean you don't enjoy what you're competing in. I see quite a lot of joy in his tennis. It might have a different quality to it than some of the others, but I see nothing in how he's on the court that indicates he would be anywhere else than the tennis court.
Anyways, this type of coaching works for Rafa and that's what matters. He would irritate the crap out of me, but none of my coaches have ever liked me very much.