One thing the authors don't mention (wich is brought up in the first paper): things can be much worse than this. If you inject untrusted content to the innerHTML of the extension itself, you've given an attacker the full privileges and permissions of the entire extension. This can be very serious if the extension has access to lots of data (e.g., many Chrome extensions have arbitrary access to all http and https webapges -- a bug in one of your extensions could give an attacker XSS on a user's bank).
The Google team has taken steps to mitigate this [3]. If you write a Chrome extension, you're being negligent if you don't implement a strong CSP. That will prevent the previous issue entirely, but not the issue brought up by OP.
[1] http://www.eecs.berkeley.edu/~afelt/extensionvulnerabilities...
[2] http://profsandhu.com/zhang/pub/ndss12-chrome.pdf
[3] http://blog.chromium.org/2012/02/more-secure-extensions-by-d...