It may be that the guru convinced his followers that this action would help them to attain to the Godhead, immortality and pure awareness. It would be the same argument as the Biblical 'If the eye offendeth, pluck it out'. No brainwashing would be required since it is quite an easy argument to make (assuming that castration reduces sexual desire and not just the birthrate), and quite easy to see some sense in it.
He wouldn't convince me since this drastic action seems like cheating to me. It is not an overcoming of desire but an admission of failure. But I can see how it might come about. Anybody who succumbs to brainwashing is not a truth-seeker, but we all have a tendency to fall-in with people who display great certainty and confidence.
To know what lies behind all this we'd have to know a lot about the situation so I don't think we can simply dismiss it as the brain-washing of a lot of people with low self-esteem. After all, the whole point of an authentic gurus' teaching might be said to be the fostering of low self-esteem (and high Self-esteem).
It all depends on the guru. Some are utter frauds and we have to be able to discriminate. It takes time to learn how to do this and meanwhile many of us are suckered in by absurd practices and doctrines. I once met someone who has two PhDs, one in physics, who spent thirty years following a fraud, even wrote a good book about it. It means nothing. There are always frauds about.