Hi guys. Sorry for the long delay between posts - I've taken a break from the book for a while. But I come bearing gifts!
Firstly, GabrielGale's analysis was robust enough to put me off that variation. But I've done some work on 7...Nfd7 8.Nc3 Bb4!? which, I believe, gives Black very good chances of sufficient compensation (I know that sounds like a dodgy sentence, but we are talking about the Portuguese, after all!). I've attached some lines on it - criticisms are very welcome!
Secondly, and assuming the reliability of 8...Bb4, I've had more of a problem dealing with the move order 7.Nc3, where, due to the check on a4, ...Bb4 is not an option. Black's best appear to be 7...c5 and 7...Bd6. The latter appears most reliable, although the crazy sacrificial line after 8.Nge2! exd5 9.g5 dxc4!? probably works out in White's favour with best play. More work to be done here!
In reply to tipau's comments:
1) I will argue in the book that 3.Nf3 Bg4 is very playable. Indeed, the line you mention with 4.Bb5+ Nbd7 5.h3 Bh5 6.Nc3 a6 7.Be2 is, in my opinion, fundamentally equal in the end. But Black has almost no winning chances, which I agree is a problem - but perhaps not enough to prevent me from publishing.
2) This is a very tricky line to meet, but Black can significantly improve with 10...h5!
3) This is a very annoying line indeed. I've done a lot of work on 4...c6, although fundamentally it's unsound, as you say. The main line you give after 4...Nbd7 5.Be2 is indeed more comfortable for White; however, again, I think Black is in principle fine with best play.
I'm very impressed that you mention here the two most annoying lines for Black! Neither is a refutation, but both are good choices over-the-board. However, if a refutation does exist, it's probably in this c4-g4 system I referred to above.
Looking forward to your comments!
Dave