I can see a lot of applications for this.
Have you ever been to a small-town library in Canada or the US? If they have computers, it's almost guaranteed that they'll be running their own special system. It's usually a horribly crippled Windows 2000 system that doesn't let you press the start button to launch notepad, doesn't let you open a new tab (*cough* I mean window, since IE6 doesn't have tabs). Many even disable the right mouse button. I guess it confuses people or something.
Anyway, these restrictions are usually put in place in the name of security. The library doesn't want their patrons visiting . . . undesirable sites, or downloading illegal stuff, or anything like that. The trouble is that it makes the system practically useless.
A few libraries even run all of the computers as terminals from one main server. In other words, it's like everyone has a remote connection to one computer. As you can imagine, this is unbearably slow. Close a window and watch as the system takes six seconds to paint the desktop background.
Anyway, I think that if Google does this properly, a lot of libraries would jump at an operating system which was mainly centred on the Internet. (Or they would if they had someone on staff who knew what they were doing.) It would mean minimal footprint on the individual machines. It would mean that an auto-logout system could be created which wouldn't prevent users from opening tabs. It should mean that you'd actually be able to save a web page onto a pen drive!
And if it didn't, because the system was open source, some enterprising library would hire a high school student to hack the system so that it did.
That's if Google does it properly.
That being said, it's certainly not the kind of operating system I'd want to use. Meh. We'll have to wait and see. I think that even if it's a detestable operating system, at least it will introduce a new platform for companies to release their software for other than Windows and Mac. And I'd imagine programs that run on the Linux-based Google Chrome OS wouldn't be too hard to port to other Linuxes.