hook_block_view_alter accepts 2 arguments:
$data: An array of data, as returned from the hook_block_view() implementation of the module that defined the block:
$block: The block object, as loaded from the database, having the main properties:
However, in some cases ctools calls this function with 2 objects, instead of an array and an object. I believe this is the cause of the WSOD issue described at. It manifests itself if you have modules that implement hook_block_view_alter and you try to put the user login block into a panel pane, and then view it as an anonymous user.
If hook_block_view_alter is to be called, then it needs to be done so with the correct paramaters.