That's terrible, and it also shows that the TSA isn't the sole source of ludicrous security theater. They made a move to take one small step towards a more sensible policy, and got rejected by other equally-wrongheaded stakeholders.
I have a, uh, "friend" who always carries a very small knife[1] through the airport. The trick is that it fits on a key ring, and is normally folded closed. Before going through the Perv-O-Tron™ 3000 machine at security, he just throws his keyring into his carry-on. It's been through over 100 flights in a row that way without getting confiscated.
http://www.usatoday.com/story/travel/flights/2013/06/05/tsa-...
It's a dumb rule, and I'd like to be able to carry a small swiss army knife when I travel.