> ... a lot of open source software had a false sense of being secure with the assumption that someone else would have audited the code ...
I agree on this part, but what's your point here? Are you suggesting closed source is better?
I don't think they're suggesting that, rather that the "more eyeballs" quote is a bit flawed (in that not every project gets enough eyeballs). A thing can still be better then another thing and not be perfect.