Oh man, that code is just horrible. No comments on some of the functions, no comments on the input parameters and return values pretty much throughout.
I really thought OpenSSL was in a much better shape.
Depends who "they" are. Bugs in the crypto code will compromise the cryptographic strength of the connection, revealing data or keys. Bugs in the protocol code will compromise the host which is running it.
Both are bad, but I'd say that "remote root" trumps "side channel attack".