惟道獨稱尊 Only The Way Is Called Honoured
逐句解 Line by line
"He partakes of the whole sky's splendour, setting forth the earnestness of the wondrous Way.
參 is cān, to take part in — the same character and the same reading as in 參禪, sitting in meditation, which he sneered at a few lines ago. 慕懃 yīn qín is diligent earnestness.
"Compared with that quiet meditation of your Buddhist teaching — extinction, a shade-spirit, a stinking husk left behind at nirvana, and still not free of the common dust.
殼 is qiào here — the husk or shell of a body, the sense that survives in 軀殼 — and not the ké of an eggshell. 陰神, the shade-spirit, is one of this chapter's own title characters, and it is an insult here: a Daoist adept was held to ascend in the body, so a soul that leaves its corpse behind has only half-succeeded.
"Among the three teachings there is no higher grade — from of old only the Way has been called honoured."
三教, the three teachings, are Confucianism, Buddhism and Daoism, normally spoken of as complementary. Claiming a rank order between them is the aggressive move, and it is the line the whole court is about to start chanting.
The closing insult is a real theological point rather than abuse. Daoist transcendence was supposed to take the body with it — the adept rises whole, or at the very least leaves a sword or a staff in place of a corpse. Buddhist nirvana leaves a body behind to be burned. He is calling that a failure.
The character he uses for the shade-spirit is one of the two names in this chapter's own title. The chapter is called, in part, the sending out of the shade-spirits — which is what Wukong did last night to save the children. The fiend has just used the same word as a term of contempt.