To unlock a locked iPad, one can follow the following steps.
- When on lock screen, press and hold the lock switch to turn off.
- When it brings up the slider and Cancel button, close the Smart Cover and open it again.
- Tap the Cancel button.
Fortunately, this issue can be fixed if you are so paranoid about someone seeing what apps you have installed. To "fix" this vulnerability, simply go to the Settings/General and turn iPad Cover Lock / Unlock to 'Off'. You will not be able to unlock the iPad using the Smart Cover.
This is the only rough "fix" before Apple releases an update to fix the issue.