My understanding is that the lounge space thing is the only information in the report that GW has actually publicly released. When I interviewed there, the students I spoke to did admit to some other things in the report that had to do with curriculum: they said something about how grading wasn't consistent, clinical stuff didn't completely correlate with classroom (??) -- I know this sounds vague, and that's kind of the complicated part of it. They aren't being open about it so a lot of this is up to conjecture. Obviously, it's pretty unreal that they would be on probation for lounge space alone.
I think the point is NOT that GW is going to become an illegitimate medical school and that the people who are going there are not going to earn a valid MD. That's not going to happen. They will get off probation. However, the mere fact that they are on it, and what that implies about the school and the quality of life there, is questionable... And that's what makes me nervous.