The fix is to force the use of a new JWT encryption key which--when set--would immediately invalidate all existing user cookies, forcing all users to relogin.

Lemmy has a few weaknesses related to their use of JWT in cookies that need to be addressed... The biggest one being that they use the same secret key for all user cookies (every user should have their own unique session key). I'm pretty sure that if they implemented that the scope of this vulnerability would be drastically reduced (but I haven't looked at the precise mechanism of the vulnerability yet).

They also need to provide tools in the GUI for admins and users to invalidate all issued sessions (cookies) and a mechanism for regularly rotating session secrets (the cookie currently lasts for a year and even if the session token gets regenerated it'll still use the same secret).

They also need to make the expiration times configurable so that security-focused servers can set short expiration times. Related, they need to force the use of unique secrets for every session (even if it's the same user using different devices/apps).

I guess that would depend on the specific case. If you physically went on my computer to steal my token or infected my computer with a virus to do it then we can assume that no other tokens have been compromised. But if the malicious actor has managed to steal tokens from the actual server (which seems to be the case here) and not the client then yes, as the admin I would certainly require that everyone log in again as a safety measure.