I don't know enough to answer with certainty but not in how I understand ETFs. AIG got blown up because they were trading CDOs - a contract whose value was tied to the inverse ability of groups of consumers to pay their mortgages. They were effectively long on the mortgage industry but short on its source of revenue. This went on because nobody knew what CDOs were or why they were being traded until the grenade had been blew up.
ETFs, on the other hand, are transparent. They are made up of actual securities traded on actual exchanges reflecting actual physical limits of quantities. The buying and selling of those securities is artificially managed in order to produce an outcome that mimics some magical number but at the end of the day, ownership of securities changes hands in order to produce their performance.
The argument is that the securities could take a shit so bad you wouldn't want to buy them but ETFs are made up of long holdings, not short ones. You can't lose more than the total value of the stock. Not only that, but you have to hold the stock - that's another place where AIG came apart at the seams, they didn't have securities, they had obligations.
I know the argument made in the article is that the APs aren't actually holding the securities, they're trading notes on big bits of them... but they still aren't multiplying them. They aren't playing with more than exist. That's a big difference... again assuming I actually understand this shit.