Titanium has a melting point of 1725 degrees Celcius. Impressive, right? Well Tungsten, with the highest melting point of all metals, will not melt until it reaches 3422 degrees Celcius. Even if that wasn't enough, its a simple enough problem to fix by simply putting a small layer of silicone on the tip of the rod. It makes perfect sense to be skeptical since we all know that Earth's atmosphere is useful for destroying space debris before it reaches the surface. However, whenever humans have designed something specifically to re-enter the atmosphere we have a pretty good success rate. If anyone tries to counter that statement with something about Challenger or Columbia, take your issue up with Hiaasenburg not me.
As for the ACCURACY of the weapon, to presume that we wouldn't be able to hit a fly on the end of a beer bottle at the foot of the Lincoln Memorial with this thing would be a leap. The tungsten pole would be stabilized from the rear by a set of GPS-guided fins that could easily guide it directly to its target once it had been released from orbit. Meanwhile, one of the two orbital Thor platforms would be relaying communications between Ground Control and the delivery system to instantly correct any problems as they happen, and ensure the bombardment is delivered to the appropriate target. Basically, think of it as a smart bomb lacking the warhead. It would still have the computer and flight systems to get it exactly where it needs to be, but rather than exploding when it got there it would just kind of...hit. And who can say what happens after that with certainty? (Unless we try it. PLEASE FOR THE LOVE OF GOD TRY IT!)
Next comes cost, the bane of any Space endeavor. However, the statement that putting one of these in space could instead build several nukes is not only false but likewise it makes no sense tactically. I'll start by explaining my second statement. The purpose of Project Thor was not to create an alternative to nukes, but rather to add yet another tactical asset to the war machine's arsenal. SHOULD the project work in the way every fan of awesomeness wants it to, Kinetic Bombardments could take out massive targets without any nuclear fallout or contamination. Let's say, for instance, you have to clear a beach for troop landings or launch a missile attack on an enemy Naval fleet. If you went with the nuclear option, you would contaminate the beach for your own troops and cause God knows how much of a problem by nuking the ocean. But if you replace those nukes with a series of kinetic bombardments, you have an awe-ing display of firepower with none of the inconvenient aftereffects. In addition, nukes are definitely not as inexpensive as people seem to think they are. Weapons-grade plutonium alone costs untold amounts of money just to refine from its original Uranium state. Not to mention the cost of actually building and maintaining a functional ICBM, and employing teams that work year round to make sure all known missiles are up to par and functional. Maintaining a nuclear arsenal is the farthest thing from cheap. And then there are nuclear inspectors to pay, treaties and international meetings to be had for the construction of new nuclear weapons, registering those weapons, blah blah blah. Nuclear arms have become tainted by bureaucracy. They're no longer even an asset, really. As soon as a nuclear weapon is used, you threaten to unlock a cascade effect as other countries start bickering and considering retaliatory strikes. With project Thor, that isn't an issue. Especially since nobody would have the ABILITY to launch a similar attack. The United States originally developed the atomic bomb, and later the Hydrogen bomb, not as a military asset but as a display of power and resolve. Project Thor would be a continuation of that legacy. Plus it might finally lead to some interesting new developments in the fields of physics, communications, and space-to-Earth travel. You'll have to forgive my tangent, I'm just kind of irritated that we haven't made another dedicated effort to colonize space yet.
Finally, getting the system into orbit. The plan they seemed to have was to use a dual-satellite launch. One rocket would carry the computer guidance system for the weapon, which would remain in orbit indefinitely. The OTHER rocket would carry the firing cartridge loaded with tungsten rods. Once both satellites were in orbit, they would be able to communicate with one another and with Ground Control to alter their orbits and take them over whatever target they are given. In place, a rod will be dropped and guided by weak thrusters until it enters the Earth's atmosphere. From there, the guidance satellite (with a preset target) would monitor the progress of the rod through the atmosphere and bring it to impact on-target in something like 2 minutes.
You can look up a lot of this information yourself online, anything under the term "Project Thor" or "Rods From God" (I personally like the second one) will usually turn up something about the project. Wikipedia has some good information as well about the strategic and tactical assets of Orbital Bombardments.