God knows the thoughts of man. That is not the issue here. I believe the Rambam is discussing something else. There is a Gemara in Shabbos (12b) which says as follows:
R. Judah said, One should never petition for his needs in Aramaic.
The Rishonim are bothered by the reason for this. The Rosh (1250-1328) in Berachos (2:2) writes that this is an issue unique to Aramaic, because it is not a nice language. The question is why. Ma'adanei Yom Tov on the spot explains that this is because Aramaic isn't its own language, but rather a distortion of Hebrew. He quotes a Rambam to this effect as well. Therefore Aramaic is not normally an acceptable language for prayer - not because it is difficult for God to understand it, but because it is not considered respectable.
If you look carefully at this Rambam, it seems that he is addressing precisely this issue. He is saying that they were not praying in one language but in a big jumble of many languages. In fact his exact words are:
כֵיוָן שֶׁהָיָה מְדַבֵּר, אֵינוֹ יָכוֹל לְדַבֵּר כָּל צְרָכָיו בְּלָשׁוֹן אַחַת אֶלָּא בְּשִׁבּוּשׁ,
Once he would speak, he couldn't speak out all his needs in one language except with distortions.
This is the reason they established a standard wording, and once they were doing so, what better language to set it to than Hebrew? But of course in truth one may pray in any language, as long as it is a proper language.