That's about 7% of the total number of bitcoins in circulation. Anyone have details on how this happened?
they'll probably reverse all transactions since then
As far as I understood bitcoin, there is no authority. Nobody can do anything about a user having 500k of his coins hacked, and nobody can do anything about the market crash either.
you can do whatever you want with your bitcoins, but currency exchange is liable to laws and regulations.
How can they? Surely if the blocks have started to get verified by other users then you'd have to fork bitcoin to do it? Wasn't "There are no chargebacks" one of the selling points of BitCoin?
Presumably they can do this because they're not actually bitcoin transactions, just exchange trades. The bitcoins and USDs entering and leaving Mtgox are not going to roll back.