Elsevier's financial interests have repeatedly caused conflicts before with the overall interest of good quality scientific publishing at a good value. There is a reason that many scientists have organized an Elsevier boycott, see this earlier slashdot story as very little has changed since then, aside from some superficial Elsevier posturing.

There are good quality affordable journals, run by professional societies or universities, which are an excellent alternative to Elsevier and other expensive for-profit journals. For the health of science, it is important that people choose to submit there. For untenured people who are under a great deal of pressure to submit to "top journals" it poses a difficult quandary, but for those of us for whom that isn't a concern, I don't see a reason to continue to support journals and publishers which have repeatedly done poorly.

This is massively a failure of the editor and the referee. I suspect the editor didn't look at it all and the referee did a quick superficial job. One big question is who the referee was. One typical method of finding an appropriate referee is to look in the references. However, in this case, since the references are hilariously bogus:

  "[7] "Q. Hausdorff and C. W. Turing. Advanced Combinatorics. Guyanese Mathematical Society, 2001"

I don't think you are going to find a Turing or Hausdorff alive and replying to email requests to referee these days! I can't believe a mathematically literate editor would look at the references (to find a referee) and not immediately realize that this is nonsense. So I suspect the editor asked someone else who had recently submitted something to the journal to write a quick report, perhaps in the spirit of mutual back-scratching. Perhaps that referee also did not notice that this was nonsense and did not look at the references either. Or perhaps the editor did a quick review instead of sending it out- the chance that two reasonable math people, no matter how overworked with their own tasks, would not notice that this was totally bogus I would hope is small.

I don't think the editors thought this was profound. I don't think they looked at it, sent it to a referee who took an extremely cursory look at it. I suspect the editors didn't look at it carefully at all and just want to get things published, fill the journal, and collect the $500 ``publication fee'." The parallel with vanity publishing is quite apt.

Indeed, the central issue here is failure of standards and refereeing.

But this case does have something to do with open-access in that there seems to be now a proliferation of low-tier journals who are desperate for submissions, and some of them use ``open access'' in their promotion of why a researcher should submit there. I get many of such solicitations each day inviting me to submit articles. I get intermittent invitations to join editorial boards of journals with names that sound a lot like credible journals, but a slight investigation shows them to be quite weak journals. Some of those are using the ``open access'' issue as way of encouraging submissions, and in some cases it seems to work. There are also instances, like this one, where ensuring ``open access'' gives an excuse for a publication charge of, in this example, $500. I suspect that such journals as financial endeavors are actually making money, judging from the number of solicitations that there seem to be and from seeing a decent number of things appear there.

1) Is a Ph.D. a near-guarantee of a spot in a skunkworks type of job (Microsoft Research and the like)?

No, as mentioned above. Only a small fraction of PhDs end up at top places, industrial or otherwise. A strong record of publications or impressive projects (and a good degree) is still no guarantee but is more important that the answer to "PhD: yes or no?" There is a big difference between a degree from a strong institution and from a lower-tier one as well. Also, the level of finishing students varies greatly. There are always some students, even at top programs, who end up getting a degree but if the work and thesis aren't strong, there is no chance of a good job at a research institution or lab.

2) Is a M.S. just as good for this?

No. Master's level programs are quite different than doctoral programs.

3) How does the 'letter of recommendation' requirement work if you haven't kept in touch with your professors?

A letter from a faculty member that says "I have no specific recollection of this student but my records show good grades" doesn't carry much weight. A strong letter from someone not in academia who is familiar with your recent work is probably more valuable.

One thing to be aware of is that in many programs, there can be a bias against older students. That is, supervising a doctoral student is a great deal of work for the advisor, and many advisors would prefer to spend that limited energy on a bright, promising 22-year old who may have an impact over a long period rather than someone who isn't as likely to have such a long career, particularly if they are likely to head to academia. Reasonable or not, this bias is present at many research institutions.

As mentioned in other comments, don't do it just for the possibility of improved job prospects. A PhD is difficult, and if you aren't doing something that you have a profound interest in and love for, you are likely to struggle.

Students who do well in the more advanced undergraduate math courses (real analysis, abstract algebra, etc.) may never specifically use those precise topics, but good performance in those courses serves as a strong testament about being able to deal with abstraction, work precisely, and construct correct arguments. Those skills will serve students well and may impress employers/managers that the student actually is pretty good at thinking and problem-solving.

Linear algebra as mentioned above is probably more likely to be specifically useful in applications: modeling, graphics, science and engineering settings, as typically relationships are too complicated to be understood effectively by anything besides a linear approximation. But many linear algebra courses are technique-based and rather cookbook, missing an opportunity to take advantage of good more abstract approaches.

I expect they are even cheaper now (under $100?), but I found a cheap netbook a couple of years ago in the $150 range that I put Ubuntu and Skype on for traveling. It's pretty sturdy and has good battery life, and it has been since used by many people as a Skype appliance, including some who don't yet have much coordination. If I lost it traveling or it took a hard fall to the floor from kid use, it wouldn't break my heart and I didn't spend much time sorting it out.

Possibly that is because of various special volumes of journals. Sometimes, there will be special issue of some journal for a conference or in memory of some notable researcher who just retired/died/was celebrated, and for those people are generally more willing to referee. So perhaps some of those people don't want a blanket refusal because they still would be willing to referee articles for a special issue. That's just a guess. But I hope this agreement pushes the choice of journals for such special volumes away from overpriced journals even more.

Just a couple of quick comments:

1) professorships in the humanities take a Ph.D, and Ph.D.s in the humanities have a significantly longer time-to-degree than the sciences and much much weaker funding along the way.
2) Not even 1% of the French Literature Ph.D.s will get decent professorships (let alone French literature undergrads) Those that stay in education will mainly get adjunct teaching positions indefinitely. Finding a decent faculty position in the humanities is very very difficult, significantly harder than a faculty position in the sciences or engineering, which as already exceptionally hard.
3) An assistant professor in the humanities does not make $100k. A full professor in the humanities would be lucky to make that unless they are at an elite institution. See the AAUP database for overall faculty salaries by institution, and there are many public databases of faculty salaries. See here for one at George Mason university, where the median income in this search for language department personnel was about $55k.

Part of the plan is to make sure people realize that mathematics is alive and growing, with active areas of research and isn't just a bunch of stuff people sorted out 100+ years ago. So unsolved problems in many guises will turn up.

There were three copies of the Eames exhibits- they were in various places, notably Boston and LA for many years, and are now in the New York Hall of Science (complete), Boston and Atlanta (incomplete.) My understanding is that the Eames had a lot of stipulations about how the exhibits could be displayed and they cannot be altered or updated. The NY Hall of Science guys spent a lot of time sorting out some of the broken parts of their exhibit, and are rightly proud of some of the finagling they had to do to get a few of the exhibits working again. They are the only ones who were able to get the light bulb cube for multiplication operational again as far as I know.

Felix Salmon dug deeper into the story and it's even worse than originally described, with significant deliberate obfuscation on the part of Silver Light, the financiers, mostly, as well as Skype. Wow. Supposedly, to "retain the best and the brightest," they buried a clause in a subclause in a contract which allows them to repurchase options at the original price, completely antithetical to the whole idea of vesting options. If this becomes a precedent, people are going to have to spend thousands of dollars on lawyers multiple times per year to comb through stuff looking for things like this. From Felix:

All of this makes any Skype investor saying “it’s not us, it’s the CEO” sound naive at best and, more likely, downright disingenuous. Unless and until such an investor wants to go on the record defending Silver Lake here, I’m going to believe Lee, and assume that it’s Silver Lake who’s largely to blame for the utter breakdown of employer-employee relations at Skype. I don’t know where they got these techniques from, but they’re very alien to Silicon Valley and indeed the rest of the business world. And they do no good at all for the reputation of private equity companies more generally.
 

Felix Salmon has some analysis here. He's got a fair amount of experience from the finance side and here is his take on it:

This does seem pretty evil. I’m sure it makes financial sense for Silver Lake, which will be less diluted by the immediate vesting of lots of options. But when you’ve just scored one of the biggest home runs in the history of private-equity investing, it’s generally considered polite to share the spoils with the people who actually run the company. Rather than summarily firing them for no obvious reason but sheer greed.

This stands as a contrast to the Zappos/Amazon deal where at least the proceeds were shared with the people who developed things. Presumably this makes people more resistant to bring in private capital or at least try to spend some energy writing yet more complicated contracts and conditions, where it will take volumes of boilerplate to express what a normal person could say in three words: "Don't be jerks."

That would have been as part of various copy-protection schemes, not under general purpose computing. The general OS (the monitor, Integer Basic, and later the Disk Operating System) were pretty understandable to disassemble and were quite well-constructed. The source code (from Woz) for the Sweet 16 interpreter was part of the original Apple ][ manuals and also quite good to read and document, although I don't know how many people made much use of it.