In the big picture, I'm not sure why the details even matter all that much. If it was a failure of regulation, then, considering that we are already depending rather heavily on the premise that current regulations are adequate, it raises serious questions about our ability to accurately determine just what constitutes an adequate level of regulation. If it was something along the lines of deliberate sabotage, that raises questions about whether any level of regulation can ever be adequate.
I see the situation as roughly analogous to the failure of attempts (clearly doomed from the start, from this vantage point in time) to control the spread of nuclear proliferation. Some things, once invented, cannot be un-invented, and neither is it realistic to expect to be able to maintain exclusive control over them. Had Klaus Fuchs not provided the Soviets with details related to the Manhattan project, they would have found some other way to aquire the information they needed... etc.
With genetic engineering, we are again dealing with advanced technology that has potential greater than we have the ability to calculate, and just to make things extra interesting, it has a self replicating component. Added to that are the implications of your earlier observation:In other words, we don't even have an effective opt-out, because "if we don't do it, somebody else will."
It seems to me then that the whole GE thing is, by very its nature, a genuine slippery slope, and -- without knowing how long it is or how steep it gets or where it ends up -- we have already chosen to ride the ride. Maximum thrill value is derived from the fact that there are no brakes, and nothing you could really call a steering mechanism. Please keep your hands and feet inside the vehicle at all times (and watch your head).