What's wrong with it? As I noted above, I clearly prefer it and have no problems with it. I've also never heard of anyone else finding articles or scriptures hard to read on the old site. It's not like the margins are set to zero, there's adequate spacing in everything I see on there.
On my 1440px wide screen one line has about 200 characters (maybe 30 words) if I maximize my browsers. It’s not so much a problem with the scriptures site because every sentence gets a new line and every line is numbered but there can still be sentences which go on for several lines. Your eye (and neck) has to travel all that distance and then go back and hunt for the right next line which is harder the further you traveled.
The guideline is to have about 100 or so characters on one line.
I guess it's just a matter of preference, though I can't imagine someone liking the wasted screen space. If a website doesn't use all my horizontal space, I zoom it up until the screen is filled. I find vasty backgrounds that take up 50%+ of the window distracting. I don't notice any additional neck or eye strain, and in fact notice less because it's much easier to read words.
I have to agree with you on this, nothing drives me more to distraction with modern web design than the tremendous amounts of wastes space on my screen. I do exactly what you do, zoom the page until the content fills the horizontal width of the screen. (Though often as not, I'm zooming in to the content to push sidebar adverts off the side of the screen like with this site http://www.geek.com/). I have a good solid 6-7" of wasted horizontal screen space ignoring the sidebar adverts, 3-4 if I add them.
All that being said, I do find that raw text that spans the screen to be harder to read...mostly because it's easier to get lost ending a line on the far right of my screen and returning to the far left (especially if the font it small, something that zooming the page up doesn't seem to have as much problem with).
I think the science on characters/line is sound. It would be really nice if they would add columns for wider screens though (or at least two columns like the print scriptures). Actually, the printed scripture is a good example of following the guideline to not have too many characters per line.