I highly doubt this will ruin Digg.. it may hurt them a bit, but I think it's mostly like a big FUCK YOU to the MPAA not really so much towards Digg. Although people do seem a bit riled up, I'm sure it will just blow over.
The part that some people are saying is that they took money for it, which, I haven't seen any proof of that, but even so, I can tell ya from first hand experiences, when the natives turn into a mob, it's best to just let them calm the fuck down, issue a statement, and do your best to try and make the majority happy.