First, to preserve the analogy between eq. 1 and 2, the thetas in equation two should have their own dynamics, which should be learned.
Second, even if Equation 1 doesn't allow it, in a general feed-forward network it's possible for the state to change dimension between layers. I don't see how that could happen with the continuous model.
Neat paper, but it'd be nice if they had tied the analogy more explicitly to RNNs in the introduction.