I grow up in Seda County in the late 70 and early 80s, and am intimately familiar with culture there. Tibetan Buddhism is not what people in the west think what it is. It is actually quite repressive and brutal. After 1950s, many regular Tibetans were glad to worship the new religion of Chairman Mao instead. Yes, it was true. Chairman Mao was worshiped as one of major Gods at Tibet when I grow up there. Then Deng Xiaoping took power and demolished Chairman Mao worshiping (one of his major blunders, on the same scale as that of 89 Tienanmen massacre), now we got this huge slum town of "religious learning" at a hot basin of Buddhist rebellions. Yes, going unchecked, that town would surely become such a terrorists base, because Buddhist monks in that area had always been very militant and had launched numerous rebellions in 60 and 70s. As a child, I heard all kinds of horrific stories Tibetan monks and their rebellious army inflicted on the Chinese soldiers and civilians alike. For that reason, many Han Chinese families kept firearms at home in that area, a rare thing in China.
On the other hand, Tibetan people in general are good people. One of my cousins married a Tibetan man and we are good drinking buddies. However, Tibetan religious upper class are representatives of a theocracy at worst: greedy, deceptive and brutal.
I am surprised that this town was tolerated for so long. I guess Deng's power was still strong even after his death.