This is a real pity for the TM community. This is not the first chip with transactional memory support in hardware: The Sun Rock was announced to have hardware TM support, and the IBM Blue Gene/Q Compute chip also supports it. Unlike other proposals for unbounded transactional memory, all these systems employ Hybrid Transactional Memory (ref, ref, ref), in which restricted hardware transactions are designed to correctly coexist with unbounded software transactions, so a software transaction can be started in case a hardware transaction fails for some unavoidable issue (such as lack of cache size or associativity to hold speculative data from the transaction, not because of a conflict). Note that, in any case, very large transactions should arguably be very uncommon, since they would significantly reduce performance (similar to very large critical sections protected by locks).
The problem with the hardware implementation of transactional memory is that they are not simply a new set of instructions which are independent from the rest of the processor. HTM implies multiple aspects, including multiversioning caching for speculative data; allowing for the commit of speculative (transactional) instructions, which could be later rolled back (note that in any other speculative operation such as instructions after branch prediction, the speculation is always resolved before instruction commits because the branch commits earlier); a tight integration with the coherence protocol (see LogTM-SE for an alternative to this very last issue, but still...); a mechanism to support atomic commits in presence of coherence invalidations... From the point of view of processor verification, this is a complete nightmare because these new "extensions" basically impact the complete processor pipeline and coherence protocol, and verifying that every single instruction and data structure behaves as expected in isolation does not guarantee that they will operate correctly in presence of multiple transactions (and non-transactional conflicting code) in multiple cores. There are some formal studies such as this or this, and the IBM people discuss the verification of their Blue Gene TM system in this paper (paywalled).
As some others commented before, the nature of the "bug" has not been disclosed. However, since it seems to be easy to reproduce systematically, I would expect it to be related to incorrect speculative data handling in a single transaction (or something similar), rather than races between multiple transactions.
Regarding the alternatives, Intel cannot simply remove these instructions opcodes because previous code would fail. I assume that the patch will make all hardware transactions fail on startup, with an specific error (EAX bit 1 indicates if the transaction can succeed on a retry; setting this flag to 0 should trigger a software transaction). In such case, execution continues at the fallback routine indicated in the XBEGIN instruction, which should begin a software transaction. Effectively, this will be similar to a software TM (STM) with additional overheads (starting the hardware transaction and aborting it; detecting conflicts with nonexistent hardware transactions) that would make it slower than a pure STM implementation.