Great but wait a minute
This is really great news in opening up the whole ebook platform, which is great, and upping the DRM vs. open debate. Amazon has had a great closed ecosystem, this may give them the pressure to loosen up a bit.
Meanwhile, its pretty obvious that none of the press on this has actually SEEN a book scanned by Google. The fact is, the OCR is about 98% accurate, and despite doing some great auto-formatting for recognizing chapter breaks and such, there is plenty of garbage left in there and you are not getting a bona fide "bought book" experience.
That said, it's hard to argue with half a million otherwise totally arcane books that can be downloaded into a tolerably readable format. However, if you're reading a classic as touted in the PR, like Mark Twain or Charles Dickens -- pay the $2 or whatever to acquire a truly well formatted book.