The Apolli, a Gemenese polytheist terrorist group, captures and boards the shuttle. They take the passengers hostage. They begin executing them in the names of their gods unless the cadets repent of their monotheist beliefs and turn back to the Lords of Kobol.
Dex, Lacy and Odin Sinclair stop the Apolli from executing more passengers.
It is later revealed that this was an STO initial placement exercise. Diego says they needed to find out how the cadets would function under stress - who would crumble and who would step up. No one was actually killed. The deaths were faked and dummies were jettisoned into space. ("Blowback")