Pretty sure I agree with Obama on this one, and feel anyone sitting in chair of POTUS would hold to that position.
I don't see how the policy wouldn't be misused. The way the linked article in OP reads (and everyone I've seen like it) is: Individuals with connections to the Saudi government are alleged to have helped shape the plot to hijack airplanes and destroy key U.S. landmarks like the Twin Towers and the Pentagon.
Alleged is the key word. I mean during our elections we are constantly making allegations of 'individuals with connections to people in the government' who are up to bad stuff. And as we understand that, the cost is possible prosecution within the U.S. (but as we've learned, not so easy to send them to jail) and/or they lose the election. Now, imagine they win the election and another country wishes to exploit those connections for no other reason than it is now possible to sue people in foreign lands because of allegations of international wrong doing.
I don't see it as huge slippery slope, but do think it would be very (unbelievably incredibly) likely that this would come back to bite the world's military super power(s) in the butt.
At the same time, the case against the Saudis hasn't been brought, and so it'll be interesting to see how that plays out. As in who will be deciding that the Saudi government is in any way responsible for the allegations (connections to 9/11 hijackers, part of the plot) and in what way will they actually be held responsible? And how long can they drag out appeals? And during all that, how might that affect our relationship with them? Are they to be beholden to us for as long as that judgment favors us, or vice versa, if judgment goes against us, are we beholden to them for trying to make a connection of them with 9/11 hijackers, but let's say that fails (badly)?
And this is all with a semi-ally. So, what would stop any enemy of any country to bring allegations against another country? Like I'd think that the fact Israel is not signatory to NPT while widely being known to have nuclear arms would be ripe for some sort of allegations (with goal of either they now disclose or are made to go the route Iran recently had to). Sure, the U.S. and its allies likely have no reason to bring such a suit, but to think no country would given the fact that the U.S. brought suit against Saudi Arabia based on (mere) allegations, does mean that during such a trial stuff can, rather easily, get exposed.
I really do see the counter argument as based almost entirely on emotion and I find it impossible to not have compassion for that side. But at this cost, it is opening up a pandora's box.
There's part of me that does think this could (drastically) change the ways in which wars are waged, which might be a great thing. But I mostly think it'll be about being ultra secretive about connections (as it already is) and don't get caught (as it already is, but with less at stake from general public perspective). With 'mere' allegations in the loop, I don't see how it will bold well for anyone unless the legal process can be rigged.