If local ISPs are involved, then what the fuck is the point of this?
Not really ISPs, at least as we traditionally think of them. Mobile network operators.
Why the fuck is there still this useless ISP middleman?
The MNO in question isn't the middleman, it's the service provider. It provides service to the balloons, which relay it to regions that are too remote to service now.
For crying out loud, this whole problem exists in the first place because the local ISPs weren't able or willing to invest in the infrastructure needed to provide Internet access to these regions.
No, most of these regions aren't served because it's uneconomical. It's not that no one is willing to invest, it's that it's not an "investment" if you know up front that the ROI will be negative. Putting up a bunch of cell towers to serve remote African farmers, for example, doesn't pan out economically because there's no way the farmers can afford to pay high enough fees to cover the costs of all the infrastructure. Project Loon aims to fix this by radically lowering the cost of serving those regions, to a point where it is economical, so the fees the people in the region can afford to pay are sufficient to make serving them profitable.
As for why Google is partnering with MNOs rather than deploying their own connectivity? I don't know but I'd guess a couple of reasons. First, I expect it will be feasible to scale faster by partnering with entities who already have a lot of the infrastructure in place, particularly when you consider all of the legal and regulatory hurdles (which in many areas means knowing who to bribe, and how -- Google, like most American companies, would not be very good at that). Second, by working through local companies Google will avoid getting into power struggles with the local governments. Google is helping their local businesses to grow, not replacing them.
(Disclaimer: I work for Google, but I don't know anything more about this than what I see/read in the public press.)
