Terminal is not insecure [sic]. It. Is. An. Application. Apps are meant to be run; but not by people on a multi-user system who do not NEED to run them (hell - the windows systems we have at work: the admins don't even let us do our own scandisks and defrags).
Obviously, like the OS installation on your home computer, there are a limited number of users and you don't give-out accounts to people who would potentially try to hack your system (except maybe for your kids; but you can beat them if thehy f! it up).
If you don't want users to do bad things, don't give them the tools. If you're stupid enough to WANT people to try to hack your system remotely and you give them accounts on the system and you leave the tools lying-around for them to use... <shrug>
This kid screwed the 'test' by giving hackers everything they NEEDED to destroy the system.
It's. A. Non-. Story.
So despite the fact that other multiuser systems have been giving local users shell accounts for, oh, thirty years now, without it being a major security hazard, in the hands of Apple, it's a nuclear weapon that must never be entrusted to end-users. That about the size of it?