Exchanges are coin holders and also have economic incentive to keep the network secure. Even if they do not “own” the coins. They have a business to run and require proper management of the ecosystem. Exchanges also do not hold the majority of other peoples funds, I would say a maximum of 30% is what it will be and eventually decrease as easier non-cusodial methods are developed. The ORV model does not allow reps with huge voting weight to double spend or steal funds, it only allows them to add or not add transactions to the network. If that happens then coin holders simply switch there voting weight to another rep.
The problem you have stated is no different to the idea of giving trust to someone else to hold your funds like an Exchange does.
NOTE: Every Holder can choose there own rep, if one decides to not process tx’s then they can choose another one.