I don't believe he has lost all the bitcoins.
I found it strange that my earlier request for blockchain transactions showing the transfer to Bitcoinica didn't get a positive answer. I'm still waiting to see the Bitcoinica liquidation claim as well.
As things stand, there's no reason to believe the official story. Supporting proof can easily be given, but hasn't.
As for what's good for Bitcoin; I'd say Bitcoin scammers behind bars. That would be excellent in deterring future scams.
I believe that I answered you regarding Bitcoinica transactions in the Blockchain - it's pointless, because there's virtually now way now for me to prove that the money went TO Bitcoinica (I can prove that the FROM address belongs to me, but I could just send it to another address of mine if I were malicious), since the site is gone and the operators aren't willing to help anyone (hence the liquidation process).
Also, no further update from the liquidators was posted, so there's nothing new to show.