I know what you're thinkin: "meh, dog bites man ... what else is new," right? Well, what's interesting is that my standard foil, Peter Surda, actually agrees with me that this specific point is circular, even as he generally agrees with Kinsella in his opposition to IP. Here's what Kinsella said in response:
Peter, I don't think it's circular because our view of property rights is grounded in a Lockean homesteading view as applied to scarce resources. Under that view you can perform any action you want so long as you do not invade the borders of (i.e., change the physical integrity of) another's Lockeanly-owned scarce resource, without his consent. How is this circular?
What follows is my response on the blog, with some hyperlinks for context:
The circularity lies in your assumption about which rights you gain by doing how much homesteading, and it is in no way obvious how the rights must work the way you think they do.
Say I homestead a plot of land. How far above and below does that homesteading entitle me to? Yes, you can justify a specific amount, but that's the point: you have to justify why your rights extend to that boundary (abstract or otherwise), not just assume that your land ownership implies ownership of the airspace through which planes fly, and then argue that "airplanes necessarily violate the property rights in already-owned land" ... which, when you think about it, is pretty much what your IP case is.
But that's just the beginning: does homesteading the land entitle you to block (non-nuisance) concentrated sound waves from passing through your land (e.g. ultrasound)? And of course, back to the ol' chestnut: does the land ownership entitle you to block every single frequency of the EM spectrum passing through?
Now, there are many cases where you can assume that homesteading entitles you to certain rights. However, here, the very debate is about which rights you are morally entitled to by virtue of homesteading what. And in that case, it is in fact circular to assume a certain level of homesteading-based rights, since you're trying to prove what the homesteading-based rights are in the first place, which people dispute!
Note that since this is the central argument of Against Intellectual Property, its circularity isn't very encouraging when judging its merit as an argument against IP.