America is a nation of immigrants. Many here describe themselves
as Polish-American because their grandparents spoke Polish, or Irish-American
when nobody in their family ever spoke Old Irish. Language contributes to cultural
identity, but it is not the sum of it. Family matters, traditions, values and even
religion are a part of what makes someone identify himself or herself as of a
certain culture. Not just language.
Yes, even if a Latino person cannot speak Spanish, if he or she is of Hispanic decent, then they should be classified as Hispanic. In some case a child is born in another country and is brought to the United States at a young age and grows up speaking English, this does not change the person's Hispanic heritage.
The language a person speaks has nothing to do with their ethnicity. So, yes, a Latino should be classified as Hispanic even if they don't speak Spanish. That is like saying a Jewish person is not Jewish because they don't speak Hebrew or Yiddish. If they were born to Jews then they are Jewish. Same with Latinos, they are Hispanic.
A Latino should not be classified as Hispanic if he or she cannot speak Spanish. I have never been big on the fact that we have to label everything to be able to make sense of it. It should not matter what language anybody speaks to be able to label their origin.
Ethnicity has far more to it than what language somebody speaks, fluency in Spanish should not be the qualifier for this just like fluency in another language shouldn't be a qualifier for any other ethnic group. Not only does this not make much sense, I don't see what problem it'd be solving.