Yes this is something completely unexpected but it also comes with the territory if you have above 1 Billion market cap, similar to what happened with Bitcoin. I don't think Ethereum will crash & burn because this is not really a bug in itself, it's a bug in the smart contract however this implies that there will be many similar scenarios in the future (well we already knew that...any code could have bugs). ETH platform can't really be held responsible if someone decides to write a smart contract to scam people...
The problem here is that the DAO had ETH curators on board and many knew and looked at the code but couldn't fix it or didn't even noticed it. The whole thing was a rushed experiment looking for a problem and now it's a major hole in the ship.
I'll definitely buy in at less than $5 if it comes to that, after bearish sentiment clearly breaks. BTC maximalists are having a blast!
It was only by fluke that the default send function wasn't affected thanks to its limited gas supply - otherwise every smart contract out there could have been vulnerable. Writing smart contracts is made out to be a casual undertaking, like coding a web page, but it's not. Further, when a flaw is found, there's currently no way to upgrade the smart contract to fix it.
This isn't the end of ETH, but it's not going to be pretty either - while there'll probably be a rebound from the current sell-off, I think this could be the beginning of a multi-month bear trend.
It depends on BTC price, if it keeps rallying I can see it go back 0.01 very soon. It's clear that smart contracts are not secure so any future dapp & dao will fail to secure funds, who will invest into the next one after this? And ETH is completely exposed since if a bunch of leading developers couldn't find this bug. Every future smart contract depend on its code and while the ETH platform may be secure their dapps and daos are not and are too complex to create or develop.
Slock.it was also one of their biggest parts going forward...people will begin to realize this, ETH above $10-12 is crazy but a complete selloff as you said won't happen in a day.