The outstanding, “pathognomonic,” fundamental disorder is the children’s inability to relate themselves in the ordinary way to people and situations from the begining of life. Their parents referred to them as having always been “sel-sufficient”; “like in a shell”; “happiest when left alone”; “acting as if people weren’t there”; “perfectly oblivious to everything about him”; “giving the impression of silent wisdom”; “failing to develop the usual amount of social awareness”;“acting almost as hypnotized.” This is not, as in schizophrenic children or adults, a departure from an initially present relationship; it is not a “withdrawal” from formerly existing participation.
(Emphasis mine)
There you have it, from the horse's mouth. It's not only true that regressive autism could have been confused with childhood schizophrenia. It was childhood schizophrenia even after Kanner first characterized autism, and I don't know for how long after that.
Today, of course, childhood schizophrenia seems to have all but disappeared.
While on the topic of Kanner, let me also debunk the myth that he claimed no one had ever observed autism before. Here's another excerpt.
These characteristics form a unique “syndrome,” not heretofore reported, which seems to be rare enough, yet is probably more frequent than is indicated by the paucity of observed cases. It is quite possible that some such children have been viewed as feebleminded or schizophrenic. In fact, several children of our group were intorduced to us as idiots or imbeciles, one still resides in a state school for the feebleminded, and two had been previously considered as schizophrenic.
(Emphasis mine)
I'll also add a link to Dr. Traffert's AWARES paper here, as it's relevant to this discussion: Dr Down and 'Developmental' Disorders.