Ehh? Disaster? Development went on practically uninterrupted (I just built and installed the latest rc).
Again deanjo is unpleasantly surprised over the fact that the slow return of kernel.org hasn't started a massive shitstorm.
But the answer is obvious, not kernel.org nor the Linux Foundation webstite are in any way a vital part of Linux development, as proven by this situation.
As for the breach itself, from what has surfaced someone with root access has had his account credentials compromised and that account has been used to deploy a rootkit which in turn has been fishing for other credentials. Obviously no security system can protect itself from a malicious user with proper credentials for a root account, so the real question is how the credentials were compromised in the first place and if security policies can be aended to prevent something like this from happening again.
I don't see how Linux has come out stronger from this,
nor can I see how it has come out weaker. It has perhaps highlighted the flexibility of it's development model (by simply moving the project temporarily to github) but I doubt that was news to anyone.
I certainly think that there will be a focus on security procedures and a tightening of account privileges, but again I can't see how this has any measurable effect on 'Linux'.