I have no cash reserves. The very first MMM post I read was on Springy Debt, and it got me on my path to Mustachianism one year ago.
I'm fortunate to be in a very good position financially, but I completely embraced MMM's concept. I set up an HELOC on my house. It's a ridiculous amount, and a very good interest rate. I told the guy when I set it up I had no intention of ever using it.
The idea as I understood it is that an emergency fund is truly that--an emergency. Something you can't or don't see coming. Of course, I save for things that I know about (e.g., property tax bill coming up). But for me, if I suddenly have a $10,000 expense to replace an air conditioning unit or something, then that's where the HELOC comes in. It's less than 4% interest, which is not that much over a few months to pay back. I can also sell mutual funds. A 10% or 20% market drop is not going to kill you. Take out only what you need, and maybe you get $800 instead of a $1,000, which sucks, but not crisis-inducing. And charging the expense to the credit card if possible (assuming it's paid off!) buys you another 4-6 weeks.
I do think it's a good idea to have known short-term items that you're budgeting for in cash or savings, and I might be hesitant to have no cash reserves if I didn't have an HELOC. But I think MMM's post is spot on that more of your money can be working for you if you've gotten yourself into a reasonably good financial position.
One more thing. There is a really good MMM post about the cost of fear. A few posts above talk about what happens if you lose your job, the market drops 40%, and several other horrible things happen. I think those posts miss the point of the emergency fund, because most people are not talking having $50,000-$100,000 in cash to protect against worst-case scenarios. Emergencies are unlikely to happen, and when they fall in the $5,000-$10,000 category, I believe MMM's springy debt concept works well. The most likely outcome is no emergencies, so extra cash can go in the market, where the most likely outcome (over the long term) is up.