An "intelligence explosion" refers to explosive increases in intelligence. What you are talking about sounds as though it has more to do with the social structure in which agents are embedded.
Do you deny that intelligence has increased recently? What about computers and calculators? What about collective intelligence? What about education? What about the evolution of human beings from chimp-like creatures.
Intelligence on the planet is exploding (in the sense of undergoing exponential growth) already, and has been for a long time - check with the facts.
There isn't really an "intelligence explosion hypothesis". The intelligence explosion is a well-established, ongoing event. One might make hypotheses about the future shape of the the intelligence explosion - although there are many of those.
I've read the paper, and while it mentions "intelligence explosion" a few times, they seem to be keeping that terminology taboo when it comes to the meat of the argument, which is what I think you were asking for.
Most of the material is phrased in terms of whether AIs will exhibit significantly more intelligence than human-based systems and whether human values will be preserved.
I think most people use "intelligence explosion" to mean something more specific than just exponential growth. But you're right that we should try and learn what we can about how systems evolve from looking at the past.
Anna Salamon and I have finished a draft of "Intelligence Explosion: Evidence and Import", under peer review for The Singularity Hypothesis: A Scientific and Philosophical Assessment (forthcoming from Springer).
Your comments are most welcome.
Edit: As of 3/31/2012, the link above now points to a preprint.