These guys are known for making ludicrous pronouncements about how the Bitcoin sky is falling. Their previous work on selfish mining made a lot of wild doomsaying claims which have not held up.
A single entity having 51% of the hashing power is annoying but not catastrophic. It would be much worse if they had 51% on their own hardware, which they don't. Any attack they can perform with their mining power would be prominently linked to them, which would cause a massive drop in their hashpower as miners fled to other pools. (Which some of them are already doing.)
So while I think concentration of mining power IS a long-term problem that needs a long-term solution, I think all the ghash wailing right now is significantly overblown.
Except that an entity with 51% power could conceivably cause damage in ways that would be hard to figure out (say, but obfuscating the blockchain -- obfuscations could easily get lost in the daily chaos of bitcoin trade). The only safe course of action is to assume that once an entity has gained 51% power, all further blocks are 'tainted', and roll back blocks until before the entity had 51% power. But this would be a huge nuisance for miners, users, and exchanges alike.
And apparently the sky is falling. From Ittay Eyal and Emin Gün Sirer at Hacking, Distributed:
But the fact is, this is a monumental event. The Bitcoin narrative, based on decentralization and distributed trust, is no more. True, the Bitcoin economy is about as healthy as it was yesterday, and the Bitcoin price will likely remain afloat for quite a while. But the Bitcoin economy and price are trailing indicators. The core pillar of the Bitcoin value equation has collapsed.
They note previous bad behaviour from GHash (which GHash attributed to a rogue employee).
Their proposal is a hard fork, with different parameters (to make huge mining pools no longer an economically rational choice), but respecting the blockchain to date so they can reasonably keep calling it "Bitcoin".