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.
This is completely false and I can't understand how you could have acquired this impression.
What do you mean by 'obfuscating'?
A 50+% entity cannot cause permanent damage to the blockchain; they cannot steal coins; they cannot generate coins that weren't supposed to exist; the ONLY extra powers they have are
(1) to suppress transactions that would otherwise have occurred, and (2) to prevent other miners from mining.
Neither of these transactions has any permanent effect on the blockchain after the attack stops, except for the omission of transactions that w...
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".