I've not heard that one before. That's just a correlation between muscle and health. There's no causation shown. For example, does it mean that poor muscle leads to poor health? Or more likely, that the poor health causes the patient to become inactive or even bedridden, which leads to muscle atrophy.

I had heard that fat somehow goes along with inflammation. As well, the body tends to sequester toxins in fat stores if it can't eliminate them.

There are scales that report % of bone, water and fat along with weight. If you can afford one, it would be motivating to use it to track your progress as I've done on my blog.

There's an upper limit to how much protein a body can tolerate before the kidneys become overloaded. Please look into that, especially if the diet seems ridiculously overloaded with protein.