I find it hard to believe that a single person would unload that many coins at once on one exchange, unless it was a hacker who was selling them for lulz.

HAHA that's very possible, then it's good bye and some people going to jail, like the MtGox owners.

Certainly not all from everyone. None of mine were stolen.

Not true, I'm sure satoshi has that many bitcoins. Look at the top bitcoin addresses and if one guy has more than one of those addresses then 500k btc isn't impossible. However good luck quickly getting that much money out of mtgox quickly. I don't think dwolla will ACH a million dollars :-P. I would like to hear from MtGox though.

Why? This how markets work. Buyers and Sellers are matched together. Someone was willing to buy at lot of BTC at pennies and someone else was willing to sell. BTC (like any other commodity) really doesn't have an intrinsic value, it is valued at what people say it is valued at. Since BTC is a new commodity and there are not a lot of people trading in it, the market (all the buyers and sellers) haven't really figured out what it is worth.

This is currently the wild west. The opportunities for reward are great, the risks are extreme. Deal with it. Have fun!