Of course, this is exactly what would happen, and was the goal of TradeFortress all along. I allowed it to happen, it's how the system works, I allowed him to incur debt for bitstamp-backed btc, as he asked. He then gave that BTC to a random unknown user that popped up immediately after (suspicious!)
Ripple was perfectly capable of giving it away on its own, once you extended trust to TradeFortress and allowed your BitStamp IOUs to enter the pool backing his IOUs.
I use ripple daily, have done for ages, never had any problem, and I only trust gateways that have my BTC and other currencies anyway, or people I know very well.
Ripple hasn't actually given been around that long, and it doesn't seem like you have actually acted in this manner rather than just saying you do.
Whether TradeFortress is honest or not his shennanigans reveal Ripple is a tremendous security vulnerability for anyone who uses it, unless you use an utterly paranoid set of precautions that have yet to be worked out.
Bullshit, it's only when the participants do not understand the concept of trust. By that logic pirateat40 revealed a tremendous security vulnerability too.
Of course pirateat40 did. Trust and greed are the opening for many security vulnerabilities.