Tor uses hashes generated with the weak SHA-1 algorithm to generate .onion addresses and then only uses 80 bits of the 160 bits from the hash to generate the address, making them even weaker.
Other weaknesses include use of RSA-1024, people have been complaining to no avail since at least 2013: http://arstechnica.com/security/2013/09/majority-of-tor-cryp...
Basically what that means for Tor, is that while it'd be pretty easy for a Onion site operator to generate two keys corresponding to the same .onion address, an _attacker_ still has to do 2^80 work to attack a site by generating a key with the same Onion address. While that's not great - 2^128 work is considered "standard" in cryptographic work - 2^80 work is still hard enough that there are probably cheaper ways of attacking Onion sites (for reference, the cumulative total work done by all Bitcoin network miners in the entire history of Bitcoin is about 2^80 hashes).
As for the 1024bit pubkeys, I'm not sure what the status of that is; from what I hear Tor is actively working towards a Onion redesign that will fix these issues, and longer pubkeys may have already been fixed.
https://gitweb.torproject.org/torspec.git/tree/proposals/224...
> This isn't actually a vulnerability yet, as SHA-1 is only known to be vulnerable to collision attacks
should be:
* this isn't a vulnerability (there are no reason to believe that we might see it vulnerable to pre-image attacks one day)
* SHA-1 is thought to become vulnerable to collision attacks
> total work done by all Bitcoin network miners in the entire history of Bitcoin is about 2^80 hashes
without thinking of hashes, current cycles done per second by the bitcoin network is around 2^90
SHA-1 is actually known to be, not just thought to become, vulnerable to collision attacks at less than the full bit strength of the hash[0].
The important part is the pre-image resistance, of which there is no known attack.
But there is a difference between the theory and actually finding a collision. And then a huge difference as well on how to exploit that.