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I often use the feature the same way. It's only "up for everyone in the world to see" if everyone has the URL, and nothing I ever share is so sensitive that the risk of someone bruteforcing all of the possible file/folder names in my Public folder poses a threat. (I imagine Dropbox would catch on to such attempts at the network level, anyway.)

I use it this way, too. If this feature goes away, I will stop using Dropbox, simply because most of the convenience that gave the service value for me would be gone. I don't think he's overreacting.

I use it in the same way too.

Different strokes and all that. I prefer to do mockups mostly in the browser, and using the public folder as a local server is an easy way to check pages on multiple devices. (I'm sure a more technically inclined person would just set up their own server.)

If I were doing anything requiring confidentiality or stealth I would work another way.