This paper makes me think again how amazing it is that science made any progress at all, before the middle part of the 20th century. Science is completely based on induction, and nobody understood induction in any kind of rigorous way until about 1968, but still people managed to make scientific progress. Occam, Bacon, Hume, Popper and others were basically just hand-waving; thankfully this hand-waving was nearly enough correct that it enabled science, but it was still hand-waving.
I don’t think it’s fair to say that “nobody understood induction in any kind of rigorous way until about 1968.” The linked paper argues that Solomonoff prediction does not justify Occam’s razor, but rather that it gives us a specific inductive assumption. And such inductive assumptions had previously been rigorously studied by Carnap among others.
But even if we grant that assumption, I don’t see why we should find it surprising that science made progress without having a rigorous understanding of induction. In general, successfully engaging in some activity doesn’t require having a rigorous understanding of that activity, and making inductive inferences is something that comes very natural to human beings.
Moreover, it seems that algorithmic information theory has (at best) had extremely limited impact on actual scientific practice in the decades since the field was born. So even if it does constitute the first rigorous understanding of induction, the lesson seems to be that scientific progress does not require such an understanding.