I'm surprised that this announcement hasn't created more excitement.
As I look at this, and I'm not a WordPress user, so I may not be in tune with all the cost factors involved, you can basically now host your own videos for essentially $60/year, without bandwidth charges. This removes dependence on YouTube for a large group of site owners, and it probably moves up the time when videos not hosted on YouTube will start to appear in Universal Search results.
My major concern with what this will deliver... "DVD quality, HD quality, and even formats optimized for iTunes and Miro"... is that it basically makes your videos free to everyone, in essentially any format,
Video production can be expensive, and DVD sales have been keeping a lot of independent producers going. Not clear what's going to happen to the marketplace as a result of this. Open source is a noble ideal... as long as it doesn't destroy the source.
[edited by: Robert_Charlton at 11:13 pm (utc) on May 20, 2009]