I am not surprised. Most of modern a/v devices are no longer dumb dedicated network clients. Having in essence a microcomputer on board which usually run Linux they are vulnerable to any external attack like typical PC. A skilled hacker knowing specific machine protocol can take complete control over the machine including flashing modified bios or os creating a living 'zombie' in your local network that can not only track what you are watching but most of all track your input from stb console including credit card number or your personal data. That is why it is important to be aware of risks when using any type of payment methods using your stb or 'smart' TV. These are next on the hackers list.
I find this story rather implausible. Is there any use for the 'Pal's Ethernet jack? If "no", why would it be connected in the first place?
I believe originally the idea was that it would be useful for streaming on-demand movies via the Internet, but its unceremonious swan dive to failtown ended that plan. It may have also been useful for firmware updates. It's been awhile since I saw the marketing materials Dish/E* put out when it was new.