I wrote about this at length in May when this paper was first made public. (The reason it’s news again is that the paper was just presented at the ACM Computer and Communications Security conference.)
What’s newly being talked about his how this works inside the NSA surveillance architecture. Nicholas Weaver explains:
To decrypt IPsec, a large number of wiretaps monitor for IKE (Internet Key Exchange) handshakes, the protocol that sets up a new IPsec encrypted connection. The handshakes are forwarded to a decryption oracle, a black box system that performs the magic. While this happens, the wiretaps also record all traffic in the associated IPsec connections.
After a period of time, this oracle either returns the private keys or says “i give up”. If the oracle provides the keys, the wiretap decrypts all the stored traffic and continues to decrypt the connection going forward.
This would also better match the security implications: just the fact that the NSA can decrypt a particular flow is a critical secret. Forwarding a small number of potentially-crackable flows to a central point better matches what is needed to maintain such secrecy.
Thus by performing the decryption in bulk at the wiretaps, complete with hardware acceleration to keep up with the number of encrypted streams, this architecture directly implies that the NSA can break a massive amount of IPsec traffic, a degree of success which implies a cryptanalysis breakthrough.
That last paragraph is Weaver explaining how this attack matches the NSA rhetoric about capabilities in some of their secret documents.
Now that this is out, I’m sure there are a lot of really upset people inside the NSA.
EDITED TO ADD (11/15): How to protect yourself.