Who's they? Hyperloop One? No--they've just punted the "hard" stuff to the end. (Kind of like the Wright Brothers designing the seats of their plane before getting it flying. Oh look! [1])
Elon Musk? Yes--I do. That's why he's waiting.
> what specific problem do you see?
The top heats up and the bottom doesn't.
> The paper calls for 0.8-1.0 inch thick steel, which my math says is more than adequate
Adding mass adds strength while increasing the time the structure takes to reach thermal equilibrium. The thermal gradient isn't itself a problem. But if you look at the forces necessary for the materials in question to tear themselves apart, and then consider their thermal coefficients of linear thermal expansion, you can derive a maximum tolerable thermal gradient given the size of each tube segment (we'll assume the problem of reticulating vacuum seals is solved).
When you solve for strength, you get too much material for the system to reach equilibrium before inclement weather either causes (a) the structure to buckle, laterally or (b) the outside of the tube to start shearing itself from the cooler inside.
When you solve for thermal stresses, you lose your strength. Microbuckling and microfracturing may not seem like a big deal, but it is when you're talking about 1 standard atmosphere bearing down from the outside with a capsule swinging about on the inside.
We need a strong material that either (a) conducts heat really well or (b) doesn't change shape when asymmetrically heated. We don't have something that meets those requirements yet that we can manufacture at scale.
[1] http://www.stacksmag.net/2013/10/space-virgin-galactics-rich...