I backed their Kickstarter, and have also met the guys and seen those airframes in person at their "Game of Drones: Flight Club" meetups in SF [0]. You're right that they still use normal propellers, and that those will be the weak spot when ramming into things. But the point is simply that the airframe itself is sturdy and nearly indestructible. They're designed to battle in the air against one another, which inevitably causes lots of falls and prop replacements. They're not meant to be "reliable" in the sense that they could fly autonomous missions repeatedly or serve other commercial purposes. They're meant to be beaters.
CF props are quite common for multirotors, but I don't think they'd be good for battling simply because they're significantly more expensive than plastic props, and for battling you're not really concerned with efficiency or prop deflection.
I wonder how many rotors they went trough the entire lifespan.