I've read that the rules of aviation are written in blood. Perhaps not enough blood has yet been spilled due to incompetency in English to write this particular rule in a durable way, despite the obvious potential advantages of the rule.
Unfortunately, as the globalization of air travel progresses, eventually accidents directly attributable to an inability to communicate in English are inevitable (some might argue that they have already occurred on multiple occasions, such as Tenerife). I suppose it will take a public outcry external to aviation to get the rules truly enforced. I think it safe to say that many countries that have not yet conformed to the rules (even though they've had years to plan for it) are likely never to do so in the future, either, no matter how many extensions are granted by the ICAO. The fact that the ICAO itself is in a location where considerable hostility to English has historically existed might also encourage the organization to be lax in enforcement and generous with extensions.
As for Argentina, this video clip from a documentary made in the country illustrating a serious ATC incident shows that problems still exist:
http://www.youtube.com/watch?v=VvrbMjDvcX8
If controllers in Argentina are grandfathered into illusory compliance without testing in the same way that ATPs apparently are, I find this worrisome. On the brighter side, the pilot seems to speak excellent English, even though the country where his airline is based has an absolutely abysmal record when it comes to English competency. (I suspect, however, that the pilot in this case happens to be a native English speaker.)