I was at Midwest Geobash this weekend (GC154HT) and attended a Reviewers' Panel where this issue was discussed at length. The two biggest things suggested to prevent this from happening were
1. Labeling the cache as a geocache, and
2. Getting the landowner's permission.
Both are important, but the problem with #1 is that someday, someone may hide an explosive and label it as a geocache. People will be nonchalant about it and then a very bad thing is going to happen.
Getting the landowner's permission is the most important thing, in my opnion. If that person knows it's a cache, situations like the one described in this thread can be avoided. And we really need to do this, because the more bad publicity we get, the more our hobby is going to suffer.