In practice, as the thesis proves, you can use iO to generate a lot of things people care about in cryptography.
I will go out on a limb and say you can use it to build almost everything interesting :)
Now, it happens for a lot of those we don't need iO and iO may be impractical, but as a theoretical building block, it's quite nice.
As for your concern, yes, this is now possible, at least in the sense that you do as good as is possible to do in making them computationally indistinguishable. This does not prevent you from attacking it in other ways :)
Two things, good or bad depending on how you look at it:
1. You can prove iO is as least as good as the best possible obfuscation scheme that can ever exist. So whatever that enables you to do or not, it's the limit.
2. It also means you can get away with handing over less secrets, ensure better isolation, etc.
The following things are possible with iO (trivially so), due to this paper:
Adaptively secure succinct garbled RAM - which would let you hand secure databases to untrusted providers and not worry about it.
Sender deniable encryption where you can't prove what the original plaintext was and various options are equally likely.
Fully deniable interactive encryption where secrecy of communication is protected even if the parties are later coerced (or willingly bribed) to expose their entire internal states: plaintexts, keys and randomness.
etc
These are just some examples.
Now, some of this, as I said, we know how to do already, some we don't. But this paper gives you iO as a building block that can do them without having to separately prove that it is as sound and secure as existing crypto systems are.
Again, iO only provides computational indistinguishability, not other things, but it is a nice primitive.