As far as I know, the password "hash" data is only protected by the permissions of the file (who can access it) and the encryption method used to create the "hash." But having access to the "hash" is far from having access to the password. Of course, access is one less step toward "un-hashing" the data and determining the password and should be corrected/strengthened.
As I understand "hashing," and I haven't even looked up anything about it, the text to be encrypted is run through a bit of code that 'simply' converts each character and/or groups of characters into another character and or/group. The code may use bits of code so that it knows how to reverse the process and that may be stored in a different place, which adds a bit more security.
So, IMHO, this specialist hasn't "broken" any passwords, he's merely found the file that contains the password hash data. Most importantly, he has found that Lion (and maybe earlier versions) are not protecting that file as well as possible. Now, if he finds the actual hashing algorithm, he'll be more likely to reverse engineer it to find out what the actual passwords might be. It is not clear to me, however, if the work he is doing requires direct physical access to the hardware or if it is actually a software-based 'attack.' Once someone has physical access, of course, the majority of the hard work has been done. It might be easier to simply run some diagnostic software tools and read an unencrypted hard drive, which might even be removed from the computer, and gather any and every thing on it—who care's if there is a password?
As has been pointed out many places, security has many parts. Physical access being one of the most easy parts...for a business or government. About all we have for our home computers is the lock on the front door. The second major aspect of security is on a network. Again, most businesses/governments know how to handle that. Home computers are not so well protected because many people don't even consider the Internet as just another network. So we are only as protected as the OS builders and our own knowledge and behaviors are. If we click on links wilt-nilly and allow anything downloaded permission to run on our hardware, we shouldn't be surprised at losing our security. As we used to say about car accidents, "The most dangerous thing in a vehicle is the nut behind the wheel!" The modern corollary might be, "The weakest link in personal computer (and more and more of our devices are actually computers) security is the animal in front of the monitor!"