So there may have been a passenger on board travelling under a false name.
While this may well be an authority screw up to allow this to happen and, as has been mentioned, fail to flag down this passport as stolen and invalid, I would hesitate to see a bigger problem with this.
Independent of what name any passenger chooses to travel under, there still is a security control to be passed before boarding. Both for people and for their luggage. So if someone travels incognito or not, for him to take along something untoward would need minding of this little detail as well.
Now if one finds a way to bypass security checks and bring something nasty, he surely would not need to draw suspicion by additionally travelling with a stolen passport?