Worrying stuff, but is it Linden's fault?
Surely the same vulnerability, in Apple created software, that allows for taking over of Second Life accounts also allowed for the taking over of computers running Firefox, IE, or Opera -- does that mean they are all insecure by design and security was not thought about in their design?
The potential for vulnerabilities in other libraries does seem to lie with LL to find ways of protecting users but, then again, I seem to recall that the JPEG library was open to exploitation for a while -- and that affected many companies software, none of whom were criticized fro not thinking of security.
I'm not sure about newer versions, because settings persist when you upgrade, but all the versions of the Second Life client, and the First Look Windlight client, come with audio and video streams disabled by default -- so I'm not sure where you get your information about them being enabled. Also, even with streaming enabled, I still find it necessary to click the "play" button to access media on land.
Your claim that credit card details are necessary to own land in Second Life isn't quite accurate either -- it is only necessary to have payment information if you own Linden land, privately run parcels are open to anyone, and with the wages some scantily-clad dancers get they simply don't need to have payment info on file (I know people who don't).
Second Life has many shortcomings, and there are plenty of ways to rip people off, ranging from pure social engineering to exploiting 3rd party software -- but the same could be said of almost all web browsers and mail clients.
Sorry to come across as a fanboy, seriously I'm not, I just feel your criticism could be more constructive and that the article comes across a little too much like FUD -- when accuracy would be a better method of criticism.
Paris Hilton because, like the aforementioned scantily clad dancers, she has a disturbing attraction despite not being real.