I think we are speaking past each other. You are talking about the problems that arise from crappy meters. I don't deny this. Further, the security needs in those meters is high. I say this from a consumer protection and a grid protection point of view (as in part of a larger defense in depth framework). And, the meters should be as secure as possible from general principle too.
However, my point is that the doom-and-gloom type scenarios, of "OMG the meters are insecure, now they own the power grid" is not realistic. There are other systems on other networks that can isolate and/or shut down places that have misbehaving meters. This is a result of grid operators being very paranoid about malfunction -- and at the level you are talking about, this looks to the grid like a malfunction. There are billions of dollars of infrastructure to protect, and from that point of view, they have already made some good moves from security standpoint -- a coordinated effort on many levels is required to get the grid to a failure state.
Again, I agree that security must be part of the entire process, however there is the other, equally valid point, which says "at some point, there will be always cheaters, and as a result this must be dealt with in a cost/benefit context". In many ways it could be cheaper to go with a fairly insecure smart-meter and just look for evidence of tampering with statistical comparisons and the occasional man in the field to look for physical evidence of tampering. I think this is particularly notable, as there is no good way to prevent people from getting physical access (security kiss of death) to the meters anyway.
