I didn't get the feeling anything is being exaggerated at all. This year seems to be worse than 2006 and approaching 1997 levels according to what I've come across. According to the Bangkok Post, Phuket had an airborne particulate count of 174 yesterday.

The source of the problem is yearly and known: burning of forest in Sumatra to clear land for palm (oil) trees. The Indonesian government is hapless in their dealing (annually) with the problem and I've heard a handful of Indonesians retort that it's not their fault but rather the blame should be placed at the feet of the wealthy Singaporeans and Malaysians who want the fields open for palm. What the truth is, I don't know.