In anything that is cloud based there is going to be some level where some hacker could get in and destroy everything. Most people on this site use cloud hosted servers, all of which would be at risk if Amazon or Rackspace got hacked. BI in the cloud is a new space and will be cautiously entered by some, but benefits will outweigh the potential risks and just as has happened in every other segment of cloud computing.
(will write more soon)
With regards to cloud - you're right, Amazon and Rackspace and so on are a single point of failure for a lot of businesses... but they also have a lot of people dedicated specifically to keeping their systems secure. The average startup, on the other hand, doesn't.
It's debatable whether DWH is more or less secure than your approach - and it also depends heavily on how the DWH is done. Having to explicitly move data around also gives an opportunity to scrub it.
For the record, the proactive approach you're taking with your responses here is heartening. The goal of my posts is always, in the end, to push for something better, not just tear down what's there. Glad to see that you've an open mind towards improvements.
Those guys for sure have a lot more manpower than we do (so far!) but I might also point out that security isn't totally about how many people you have working on a problem, but how simple you're able to make it. But - that's not me getting into a security argument...