"Smart contract" is just a name someone gave to these things. It doesn't mean they're actually contracts in the meeting-of-the-minds sense. It's probably more elucidating to call them "transaction function machines" or "conditional transactions" or something.
TheDAO was a function machine designed to work a certain way, like a one of those Lego Technics cars or Tinker Toy Ferris wheels.
It didn't match its design spec, and its investors got hammered. That seems completely reasonable to me; if you're investing in the success of a design project, like the SpaceX rocket, whether you lose your money because the rocket spec isn't useful or you lose your money because the actual rocket wasn't designed according to spec and it crashes and burns, you still lost fair and square.
You can blame gravity (the "attacker") if you want, but in the case of TheDAO they were just the person to do what someone else would eventually have done. The system was fundamentally unsound and going to break.
Re: Jameson Lopp's tweet that <1000 people in the world are able to evaluate whether such "rockets are built to spec," that is if anything just an argument that few people had any business investing in TheDAO or perhaps any other Ethereum-based project going forward.
Of course that's not something Eth holders are going to want to accept, because it would mean Ethereum is largely a dead end or at least has major problems to resolve before it can have even a chance of success (perhaps moving to a new language like /u/ydtm suggests). At the very least it will require a multi-year track record without such a calamity, which precludes a market cap anywhere near Bitcoin's any time soon.
I today realized a huge reason why reversing the "attack" has been argued for so vehemently by so many people despite it being a total reversal of all of what Ethereum supposedly stood for, is that so many people invested ALL their Eth into this function machine called TheDAO because they were assured it was safe. So their entire stake in the project, which is likely life-changing for many since it went up 20x from the ICO, is at risk.
Of course they are willing to compromise on the entire principle of the system. They first and foremost want their money back, and even if Ethereum would be much more likely to succeed without the intervention they no longer have a seat on that moonship.
In other words, they have no incentive to argue for something that would enable long-term success if it means they get no stake in it. Yet another too-big-to-fail dynamic, yet another bitter fruit of the ICO/premine and its centralization of stake, yet another reason not to move to PoS, yet another step deeper into the moral hazard quicksand.
By the way, if the ICO/premine was to "fund development" and TheDAO is being considered growing pains, why aren't the premine-enriched founders partly reimbursing TheDAO investors out of pocket? If you remove the rising-tide-lifts-all-boats context of Eth having - at today's price - gone up 13x since ICO and instead just look at the ratio of benefit accruing to Ethereum's founders and friends (think Stephan Tual) and its investors, the investors are seeming to get massively shortchanged at every juncture.
These guys created and security-reviewed TheDAO. They encouraged investment in it. They told everyone it was a no-brainer as they could always withdraw their funds later. They assured everyone after the warning of an exploit that "no funds were at risk."
Had TheDAO succeeded, these guys benefit; had TheDAO failed these guys benefit from the longer tie-up of funds in unsellable Eth to the tune of 1/3 of all outstanding coins (what a dream come true for an insider who want to cash out before everyone else!); now that TheDAO is imploding these guys are making sure their would-be losses are erased from the record, in a way that others' losses simply cannot be (it would be impossible to bail out every contract gone awry even if that were a desirable goal).
