Re:Analysis a bit weak (Score 1)

I agree. The weaknesses mentioned are not Bluetooth-specific. If you use the 16 octets for the PIN, there is nothing wrong with the security, and building a Diffie-Hellman exchange on the application level to obtain the PIN automatically should not pose a problem.

There are some security issues in the E0 algorithms, but the efecive key length is still around 73-84 bits which is more than enough (article here).