The reasoning for why the new license sucks has absolutely nothing to do with the GPL, despite the uninformed ramblings of the Slashdot crowd.The new license is GPL-incompatible. Applying it to the client-side libraries has been "deferred" according to the Project. To me, that sounds like future plans are in store for applying it to client-side libraries. Once that happens, anybody who distributes a GPL application linked to Xlib without obtaining extra permissions from the application's copyright holders (similar to the OpenSSL exception) will be violating the GPL.
Of course, the problems the license change introduced were not the sole problems. libGL was under an SGI source license which is not GPL compatible. Anyone who was distributing a GPL application linked to the GLX library for XFree86 was also in violation of the GPL already. There are a few other examples of GPL problems related to the variety of licenses that XFree86 finds acceptable to include in their codebase.
The new license is impractical because it requires that attribution to be given to the XFree86 developers wherever any other attribution is given to another party.Alternately, this acknowledgment may appear in the software itself, in the same form and location as other such third-party acknowledgments.
That alternate stipulation waters down the doomsday scenario you propose. The "corruption" is limited to the software itself.
There's also potential for the license to "spread" as people lift code, resulting a wide variety of apps with hundreds if not thousands of authors that have this incredibly stupid licensing stipulation.The potential for the license to "spread" is exactly the same as the potential for the GPL to spread. In this case, only an attribution requirement (which can be trivially satisfied in an "About" box or in a startup message on the console) is being spread, rather than the stipulation that you must provide all of your software under a GPL-compatible license, in the case that you reused some GPL software. Putting it in perspective, it's really not all that bad. It's not nearly as bad as the advertising clause in the original BSD license, for example.
Remember that the intent of this license is to prevent proprietary developers (such as those of other commercial X servers) from using XFree86 code without giving credit to the project. It was not intended to inconvenience open source developers, and it hasn't yet been made clear to me exactly how the new license is the problem with XFree86. To me, it looks like the real problem is that developers are jumping ship due to the glacial pace of development and resistance to new ideas.
If one is looking for a conservative and stable open source X server, they will find it in XFree86. However, it is being made clear that a significant number of users prefer an X server with regular feature additions and a shorter development cycle. It is unfortunately impossible to satisfy that demand within the XFree86 Project, so new options have opened up, largely thanks to people whose needs differ from XFree86 and who are willing to put in the work to improve choice in the open source world.