Living in Germany, Snowden leaks didn't bother me much (and as I've heard from "Piraten Partei" member, most voters don't care either). I'm of no interests to secret services whatsoever and if checking my emails helps them fight some !@@#ers, I don't mind.
Intent DOES matter to me and I do not think that any government in western democracies would dare misuse this power for oppressing people.
From US perspective, I can understand you guys are worried about some of the surveillance being unconstitutional, but when law is breached at that level, it's like breaking UN laws, there is no authority to punish you.
To my knowledge, US (and, actually Israel) is present at German Exchange Points (http://en.wikipedia.org/wiki/Internet_exchange_point) so this move is more of a gesture, rather than actual protection.
Nevertheless Merkel's move is good for EU, already because it would create more jobs in Europe, so I welcome it.