Excellent points and excellent article. Though to play Devil's Advocate, there is certainly a silver lining. Ethereum's response to the crisis has been swift, effective, and in all likelihood will lead to changes which will make it an order of magnitude more difficult for a similar issues to arise in the future. On the other hand, the response to 2008 (which given the circumstances was necessary) has unquestionably increased the fragility of the system while fixing none of the problems that created the crisis. So in that sense, Ethereum still feels like a big step in the right direction. This is an evolutionary process. We can't expect new solutions to also be infallible. Criticism is helpful in as much as it inspires people to create even better solutions. It is clearly possible to imagine cryptocurrency systems which are more morally defensible than others. Creating them is certainly the hard part.

Yes, reversing the contracts mid-flow would leave miners weary and the amount of revenue ether is generating can't be bought. In order to create the "Final Token". The hard-fork could also leave many companies behind soley based off the data and projection speed in Ethereum, Factom, Steemit, etc.. The generation gap will eventually speed up and bring people to 'One Consciousness,' at that time our knowledge-base will be astronomical. Until then, let the miners mine, the whales whale. and the trolls troll. Whatever decisions are made, It will be the best for all communities and coins.

I couldn't have put it better myself; it is indeed a bailout, like you say they are transferring the cost of negligence to people not involved in said negligence.

The cost may well be a massive devaluation of ETH as big investors get nervous and more to the point, investors who are fully committed to cryptocurrency values. A hardfork, is basically saying that we're prepared to act like a centralised government if we really want to.

Trust is an issue and I think a hardfork breaks all kinds of trust.

>Furthermore, DAO's terms & conditions explicitly warned that there might be bugs in the code which might lead to a complete loss of both DAO tokens and ether...

The above statement just astounds me and shows that people invested without fully realising what they were doing, maybe this is a lesson in reading Ts & Cs, when it comes to new cryptoprojects.

*CG*

To reverse the DAO contract an overwhelming majority of the miners must approve, which is not easy to do.  In the case of Ethereum being such a young new blockchain still in beta its still possible and fairly easy to do.  If the hard fork is approved by miners in Ether the DAO will be refunded of all ether by reversing only the DAO transaction in Blockchain.  Now this becomes a question of Social Consensus vs. Badly Wriiten Code that enabled a theft to steal something that was not his.  Another issue here is that if DAO tokens holders not refunded SEC or a government body could intervene.  Another issue to think about here is if/when Ethereum has a Dark DAO to form,  "Assassination  DAO", social consensus could form strong enough that a soft fork is establish blocking this DAO transactions on the blockchain.  This is a very important moment for Ethereum future.  The question here is will Ethereum let social consensus decided what is right and wrong in extreme circumstances or only let code rule.  This is a question that must be answered soon.

Whilst I disagree with your argument, your point is well made.

I can use your five enumerated points above to argue for exactly the opposite.  

1.  You acknowledge that the code was "poorly written".  By this I assume you mean, at least in part, that the code does not operate as the programmers/developers intended and as was advertised to the community.  
2. The DAO is not part of the Ethereum project, but it is built upon the Ethereum protocol and therefore is subject to all the "normal" rules of the protocol.
3. The statement in the DAO terms and conditions that "nothing but the code matters" is very true in the sense that the code itself cannot be changed.  It's a simple statement of fact.  But the DAO terms and conditions cannot supersede or change the rules of the platform upon which it was built.  Those rules clearly do allow miners to agree on the state of the blockchain as regards ownership of ethers, and even to reverse transactions, via "consensus", specifically Nakamoto-style consensus.  Nakamoto-style consensus simply requires 51% of the hashing power, nothing more.  Everyone (DAO participants, developers, and even the attacker) knew this, or should have known it.  
4. The fact that weaknesses or bugs "could" lead to the loss of coins doesn't necessarily mean that they must.

Blockchain tech is nothing more than an arguable inelegant solution to the Byzantine General's Problem.  It's utility is that it allows people who don't trust each other to nonetheless reach consensus on that state of the network.  But, it doesn't prohibit people who do trust each other from acting in a coordinated way to protect the viability of the network itself.  

For me, the question is which threatens the future viability of the blockchain most--reversing a transaction that was OBVIOUSLY a coding error (as you admit in number 1) and protecting a thief from stealing coins or 2) insisting that "code is law" and that no transaction, not even aggregates and extremely costly mistakes, should ever be reversed.

I argue that refusing to reverse and honor the original expectations of the participants does the most damage.  How do we know what those expectations were?  Well, perhaps we don't exactly.  But we know with a very high degree of certainty what they were NOT, and they certainly weren't that some hacker genius would be able to walk off with all the coins via unilateral action that participants hadn't approved.  We can this point via a simple thought experiment:  If this particular exploit had been known with certainty to every DAO participant, how many of them would have actually put money into the DAO?  Easy answer:  Few to none.  

Thus, insisting that "code is law" and refusing to correct what we now know was obviously a coding error via soft or hard forks is essentially to insist that every single smart contract in the future will serve as a "trap for the unwary", with the "unwary" being essentially anyone who can't read code for themselves, and even a large portion of those who can.  Also, this "trap for the unwary" approach creates a perverse incentive for unethical smart contract developers to attempt to "build in" hidden backdoors that the developer himself/herself will eventually exploit.  The market will quickly lose confidence in any such system.

Virtually ALL software has SOME exploitable bugs, even audited software and even open source software.  Smart contracts are ultimately just software, and every one of them that is sufficiently complex will likely be buggy.  When a thief undermines the security of ordinary software programs, users know that they have SOME recourse (in the courts, via law enforcement, etc.).  Consequently, are willing to use and rely on software.  If the Ethereum community's position is going to be that there is never any recourse for buggy software because "code is law", then it's future success relies upon expectations of the impossible--that programmers will suddenly begin to consistently write complex code that is bug free.  Good luck with that, and good luck getting people to rely on Ethereum and smart contracts with that business model.  

In short, my contention is that market participants will respect and value that the Ethereum community independently chose to prevent a thief from undermining every single DAO participant's original expectations to the thief's great advantage.  This will instill confidence in the system, leading to continued growth and investment.  Failing to remedy the situation will result in the opposite:  A permanent loss of confidence and decreased growth and investment.  

Does this mean that we have a hard or soft fork every time we discover a bug in a smart contract?  Obviously, that won't be possible once there are thousands or millions of smart contracts.  And, in some cases, it will be much less clear whether or not the software in question was in fact "buggy" or functioning as intended.  Even so, just because the Ethereum community won't always be able to intervene to fix a bug doesn't mean that it should not do so in this instance where the facts are clear and the amount at stake is large.  

Disclosure:  I do hold some ether, but I'm not a participant in the DAO.

You can always stay on the old chain.

So you're wrong

Those five points are undeniable facts - but still I disagree with the conclusion.  Those five points tells me very clearly that the Ethereum project is under no moral obligation to revert this, but they don't tell me it's wrong to revert it. 

I see one and only one argument against reverting - it's the "slippery slope"-argument.  The "slippery slope"-argument is often, but not always a logical fallacy.

> In case of Ethereum it is a bailout in terms of lost reputation

This is a valid point - still, the cat is out of the bag.  Fork or no fork, quite some of the reputation damage is already done, and 

* Quite some reputation was lost already when people got aware that the DAO was leaking - so it's due to badly written DAO-code and not a problem with ethereum itself, but still ... even I, a programmer that sometimes manage to create more bugs than LOCs, thought the risk of money lost due to crappy code was the least of the risks - after all, the code was reviewed by lots of folks, right?  I think that after this, people will be a lot more careful to put money into "smart contracts" written in a turing-complete language ... which may be bad for the Ethereum project.
* Quite some reputational damage was already done when Vitalik *promised* to "make things right" through forks.  That's a pretty bold promise, and it already does show the project is more centralized than what we like it to be.
* To fork or not to fork?  Both decisions causes lost reputation.