Are the claims made about Gaddafi's Libya in this article truthful?

That's some rather extraordinary selective quoting of the New York Times. Bearing /u/commiespaceinvader 's warning about the 20 year rule in mind I think it's safe to comment on this as it refers to the overall "People's Jamahuriya" system that had been in place in Libya for decades, and the NYT description of what was in place in 2009 is equally accurate for previous decades as well.

The NYT article, which you can read HERE, says in full:

The New York Times was invited to Libya to spend about two weeks observing what officials here bill as direct democracy. Colonel Qaddafi’s idea is that representative democracy is inadequate because it involves citizens assigning their rights and responsibilities to someone else. In Libya, the theory goes, everyone is involved in every decision. People meet in committees and vote on everything from foreign treaties to building schools.

Authoritarian leaders all over the world take steps to create a veneer of democracy. In Egypt, for example, there are elections, though there is never any doubt that the governing party will win.

Libya outdoes almost all of them.

Here, tens of thousands of people take part in meetings to discuss issues that are decided by a small group at the top, with all direction coming from the Brother Leader.

“He makes the decisions,” said a high-ranking diplomat in Tripoli, the capital, who is not being identified to avoid compromising his ability to work here. “He is the only one who knows.”

In other words it says the exact opposite of what this article alleges.

Make no mistake, Gaddafi's Libya was every bit a military dictatorship. The concept of Jamahuriya, which is a portmanteau combining the Arabic words for "Republic" and "Masses" is no more indicative that Libya was some sort of democratic paradise than does North Korea's self description as a "Democratic People's Republic" or Soviet propaganda about being a proletarian utopia.

I also love the disingenuousness of the author's attribution line as "a scholar at Harvard University". He is not a Harvard University academic professional. Rather he is, according to his twitter feed, a Harvard grad student.

His twitter feed and the rest of the article also make it clear that he engages in a number of terrorism-related conspiracy theories. This, for instance:

Lest we forget, the CIA gave birth to Osama Bin Laden and breastfed his organization throughout the 1980’s. Former British Foreign Secretary Robin Cook told the House of Commons that Al Qaeda was unquestionably a product of western intelligence agencies. Mr. Cook explained that Al Qaeda, which literally means “the base” in Arabic, was originally the computer database of the thousands of Islamist extremists who were trained by the CIA and funded by the Saudis to defeat the Russians in Afghanistan.

Is pure and utter nonsense.

Source wise:

Again, I think the actual NYT article does a perfectly fine job describing the Libyan regime. I'm not much of a Libya specialist but likewise a better picture could be garnered from the relevant sections of books like Eugene Rogan's The Arabs: A History or from this New Yorker article investigating Gaddafi's role in the Lockerbie bombing

For the actual origins of al-Qaeda, US involvement in Afghanistan and support for Islamist groups see Steve Coll's Ghost Wars.