If they're not using SNI, this is reasonable. Hopefully they're not using SNI.
That being said, I'm hoping they'll switch to SNI at some point. Windows XP won't be around forever (well, one can hope...). IMHO SNI is the better long-term solution (especially when it comes to costs), so once the number of clients not supporting SNI drops to a negligible number, they should go for it.
With regards to the security hole, do you mean to say that having the domain name sent in the clear before the secure session is established is the problem? Other than some narrow privacy concerns, I can't see the real issue here, given that most of the time a certain IP address implies a certain domain name, and the destination IP address needs to be sent in the clear.