Current estimates claim that over 1 million Taiwanese live in China, 4 million Taiwanese visited China in 2008, and Taiwan received some 3.8 million foreign visitors in 2008. About 4,000 mainland Chinese tourists visit TW per day as of April 2009.
It'd be very logical to assume that, out of the many millions of people cited above, some are working as spies for whatever country they're paid from. Spying is a fact of life and most are caught and "processed" quietly. The ones that receive a lot of publicity are exceptions, usually done for political gain. In this particular case I think what we have is an amateur spy wanna be. It's like if I went to China on tourist VISA, rented a boat to take photos of military shipyards with huge extended lens SLR camera's in broad daylight for everyone to see. Oh wait, I think that's already done.
<rant>
IMO one of the worst decisions made was to open direct flight across the island. I'm in favor of direct flights and tourism, but not unrestricted. They should have went with the original plan to restrict direct flight to Taichung airport (prolly needs an expansion) and route the tourists through central area first. That way it'd be easier to keep track of incoming tourists and benefit central TW's economy (Taichung, Changhua, Nantou, etc.).
The KMT pour $ into the north and DPP pour $ into the south, leaving middle TW behind. I say route the Mainland Chinese tourists there and build a bigger and better National Palace Museum in Changhua (Taichung already has the over-sized KTVs). The original one in Taipei can't display all the treasures due to lack of space anyway.
As for national security concerns, it's the military and civilian leadership's job to negotiate best way to restrict public and tourist access to sensitive areas. If you put a tourist spot next to a military base, you cannot blame the tourists for taking photos there. That's like... if a bunch of us took a tour to Russia, and we went to visit a military airbase. Of course we're going to ignore the sign that says "no photos!". That's like putting candy in front of kids and say "don't eat it". It just doesn't work.