Yes, but the main argument for the hardware back button being "broken" was that it was inconsistent. This article shows that the only thing it is inconsistent with is the iOS model of multitasking.
Activities are hidden, they are not a user visible concept, so you cannot easily build a mental model without knowing and consciously thinking about them. From the UI, it just looks that the button has been overloaded with two functions: changing applications and changing views in the same application, because applications and views are the two very obvious UI concepts.
I also think Matias Duarte and the Android designers agree that the back button has some problems as Android 4 now has two back buttons: the good old one on the bottom and another one on the top left that behaves just like iOS's. I'm not sure two buttons with similar but slightly different behaviors are the perfect solution but we'll see if people like it.