What is 'discriminating wisdom' in the early Buddhist texts?

I said, no, because there is the faculty that 'discerns the dharma' which is not a sensory faculty but discriminative wisdom.

The above is plainly wrong because the mano faculty is a sensory faculty that senses the mind's feelings, thoughts, emotions, etc, which many never discern the Dhamma; even though it also discerns the Dhamma when fit to.

I was arguing that there is a clear distinction between sensory and rational faculties in Greek philosophy.

If the above is true, it is not Buddhist because the type of "rationality" or "wisdom" Buddhism seeks to develop is based on direct sensory perception/cognition.

Then someone said, what about in Buddhism, where 'manas' is given as one of the six sense gates? Doesn't this mean that Buddhism equates manas and sensory faculties?

Yes. Manas is a sense faculty (per MN 148) as well as the creator of intentions (per Dhp 1). The word 'mana/mano/manas' is used in this two fold sense because what the mind senses forms the basis of its intentional behaviour.

In the sutta the perception of thought is included in the same classification as other sensory perception and they are all thought of as occuring due to 'contact'. That which is thought of in that way is said to make contact associated with it's occurence on the account of which it is felt & otherwise experienced.

In the sutta that which we call 'thinking' is essentially spoken of as something cognized, perceived, conceived & felt.

The word close to 'intellect' in the sutta is also called 'mind' and 'consciousness' - citta-mano-vinnana

It is spoken of as that which cognizes, as that which is the forerunner and the maker. It is thought of as implicated in all 6 classes of contact but that not as the same element because it is thought of as 'changing as it arises'.

This element of consciousness is spoken of as 'to be fully understood' whilst 'discernment/wisdom' as power & faculty is to be developed.

From MN 137 below, we read about the six sense media, one of which is the intellect or mind medium which senses ideas and thoughts.

From MN 137 (translated by Ven. Thanissaro):

"'The six internal sense-media should be known': thus was it said. And in reference to what was it said? The eye-medium, the ear-medium, the nose-medium, the tongue-medium, the body-medium, the intellect-medium. 'The six internal sense-media should be known': thus was it said. And in reference to this was it said.

"'The six external sense-media should be known': thus was it said. And in reference to what was it said? The form-medium, the sound-medium, the aroma-medium, the flavor-medium, the tactile-sensation-medium, the idea-medium. 'The six external sense-media should be known': thus was it said. And in reference to thus was it said.

It further talks about eighteen explorations of the intellect, basically examining the six sensations for basis of pleasure, pain and neutrality. This includes the idea or thought sensations sensed by the intellect.

"'The eighteen explorations for the intellect should be known': thus was it said. And in reference to what was it said? Seeing a form via the eye, one explores a form that can act as the basis for happiness, one explores a form that can act as the basis for unhappiness, one explores a form that can act as the basis for equanimity. Hearing a sound via the ear ... Smelling an aroma via the nose ... Tasting a flavor via the tongue ... Feeling a tactile sensation via the body ... Cognizing an idea via the intellect, one explores an idea that can act as the basis for happiness, one explores an idea that can act as the basis for unhappiness, one explores an idea that can act as the basis for equanimity. Thus there are six happiness-explorations, six distress-explorations, and six equanimity-explorations. The eighteen explorations for the intellect should be known': thus was it said. And in reference to this was it said.

Discussing "discrimination" specifically, there's AN 5.95 quoted below:

From AN 5.95 (translated by K. Nizamis):

When endowed with five qualities, monks, in no long time a monk penetrates and intuits the Unshakeable. Which five?

Here, monks, a monk is one who has attained discrimination of meanings, is one who has attained discrimination of principles, is one who as attained discrimination of language, is one who has attained discrimination of the illuminating qualities (of knowledge), and he reflects upon the mind as liberated.

When endowed with these five qualities, monks, a monk in no long time penetrates and intuits the Unshakeable.

The word "discrimination" here is paṭisambhidā. The translator's commentary states as follows. There are more commentaries on other terms in the link to the sutta.

Paṭisambhidā: formed from paṭi- + saṃ- + bhid, where paṭi + saṃ should probably be understood as 'back together', and the verbal root bhid means 'to break, split, sever'. Rhys Davids and Stede propose that a literal rendering would be "resolving continuous breaking up", and gloss this as 'analysis, analytic insight, discriminating knowledge'; moreover, they associate it with the idea of 'logical analysis' (Pali-English Dictionary, p. 400.2). Bhikkhu Nyanatiloka similarly renders the term as 'analytical knowledge', but also as 'discrimination' (Buddhist Dictionary, p. 137). Bhikkhu Ñāṇamoli voices a divergent view in a note to his translation of in Buddhaghosa's Visuddhimagga, XIV.8, where he renders paṭisambhidā as 'discrimination':

Paṭisambhidā is usually rendered by 'analysis'... But the Tipiṭaka explanations of the four paṭisambhidā suggest no emphasis on analysis rather than synthesis... 'Discrimination' has been chosen for paṭisambhidā because, while it has the sense of 'division', it does not imply an opposite process as 'analysis' does. Also it may be questioned whether the four are well described as 'entirely logical': 'entirely epistemological' might perhaps be both less rigid and nearer; for they seem to cover four interlocking fields, namely: meanings of statements and effects of causes (etc.), statements of meanings and causes of effects (etc.), language as restricted to etymological rules of verbal expression, and clarity (or perspicuous inspiration) in marshalling the other three. (The Path of Purification, 5th ed., 1991, p. 804, n. 4)

In this translation, I have decided to follow Ñāṇamoli's rendering of the term. Even so, 'discrimination' does not so clearly capture the double sense of both 'taking apart' ('analysis') and 'combining together' ('synthesis') that seems to be suggested by paṭisambhidā. One kind of epistemological process which involves both of these activities is 'classification', in which various things, even within a given class or group (e.g., attha, 'meaning, result', dhamma, 'principle, cause', nirutti, 'language, means of expression'), are divided and grouped according to their peculiar differences and similarities with respect to one another. So, while each of the paṭisambhidā is itself a classification of a kind of knowledge, it is also possible that each one is also understood to be a kind of ability to 'classify' correctly the elements belonging to the kind of knowledge that falls into its scope.

In Visuddhimagga, Buddhaghosa (PTS Vism 438), presents a list of what he considers to be twelve different kinds of paññā ('understanding', 'wisdom'); the set of catasso paṭisambhidā, 'four discriminations', is the twelfth of these. He goes on to give an extensive discussion of them (XIV.21-31, PTS Vism 440-443), which, although of interest, is very much influenced by the Abhidhamma interpretation of the term: Buddhaghosa begins by citing the definition of the Abhidhamma Vibhaṅga (Vibh 293), and then proceeds to follow the subsequent Vibhaṅga discussion (XIV.24, Vism 441, citing Vibh 293-295). If Buddhaghosa was indeed the author of the Sumaṅgalavilāsinī (see note 8 below for details), then his Abhidhamma-based account of the four paṭisambhidā may well diverge from the original meaning of the term in the period in which the Suttas evolved and were committed to memory. For the same reasons, this is very probably also the case for many commentarial interpretations of earlier Sutta concepts.

Just for comparison, Ven. Sujato's translation of AN 5.95 reads:

“Mendicants, a mendicant who has five things will soon penetrate the unshakable.
“Pañcahi, bhikkhave, dhammehi samannāgato bhikkhu nacirasseva akuppaṁ paṭivijjhati.

What five?
Katamehi pañcahi?

It’s when a mendicant has attained the textual analysis of meaning, text, terminology, and eloquence, and they review the extent of their mind’s freedom.
Idha, bhikkhave, bhikkhu atthapaṭisambhidāpatto hoti, dhammapaṭisambhidāpatto hoti, niruttipaṭisambhidāpatto hoti, paṭibhānapaṭisambhidāpatto hoti, yathāvimuttaṁ cittaṁ paccavekkhati. A mendicant who has these five things will soon penetrate the unshakable.” Imehi kho, bhikkhave, pañcahi dhammehi samannāgato bhikkhu nacirasseva akuppaṁ paṭivijjhatī”ti.