The scenario I saw play out is admittedly far-fetched but as a Slashdot reader, I've come upon shocking articles regarding our infrastructure here in the US being targeted by hackers from inside Russia and China. Here's one such example:
http://technology.timesonline.co.uk/tol/news/tech_and_web/the_web/article2409865.ece
Now let's do a bit of extrapolation:
1. widespread adoption by NYC & LA -c class municipalities
2. traffic signal control governed by this 'network'
3. Understanding of the architecture gets into the hands of even more virulent enemies.
These three steps are not unlikely should this technology prove to be effective and become popular.
Now consider this scenario.
It's a day with fairly good weather near the Holiday shopping season. Commercial activity is at it's peak, along with tourism. A physical attack is then initiated along the lines of a medium sized chemical or biological weapon, or perhaps bombing of a central municipal structure such as Grand Central Station in NYC. Coordinated with this attack is a simultaneous assault on the traffic control network. This attack makes it impossible to
a. escape the scene
b. get first-responders to the scene
Result: complete chaos and panic.