Not being an expert in this area, it also raises concerns about security. Could the channel be hacked since it is not technically at the Bitcoin blockchain layer. If anything, it is adding another area of vulnerability, something that Bitcoin excels are removing.

The security of Lightning and keeping it to be zero-trust even when your funds are all tied up in multi-signature contracts with other channels is where 95% of the effort in Lightning has gone. And other than some edge exploits that have happened, I'd say they've pretty much got that right.

However, every single piece of software I've seen on the Lightning Network calls itself Beta and warns that all funds are at risk :-)

Privacy is the other area they've worked on and they've done pretty well. There is room for improvement but right now its good. I would say that Lightning would make a pretty amazing money laundry system if only you could move significant sums through the public network (which you largely can't).