I have this pet peeve too. "Hypothesis" and now even "conjecture" are referred to as "theory". That said, it's just how the English language has evolved, so I accept its usage in daily matters. "I have a theory for why this club's empty today" - that's OK by me.
When it comes to stuff like this, yes, it's an abuse of "Theory" or as you say, even "hypothesis". There should be a new term for "batshit insane misbeliefs that are utterly blind to well established theories with six sigma+ peer-reviewed evidence". Any ideas?