Actually, these rules don't affect whether or not it was legal before.
This rulemaking power is built into the DMCA, and don't have any retroactive effect that as far as I can tell.
These exemptions are only for a limited time of three years. Assuming it was illegal before to jailbreak, it is would now be legal until the exemption fails to be renewed. However, actions could still be filed on jailbreaks from last week, for instance.
No, it wouldn't apply to the iPod Touch or PS3.
The exemptions are limited to exactly what the Librarian puts in their rules. Because the rule in question only mentions "wireless telephone handsets', it would not apply to iPod touches or PS3's.
The provision is as follows:
Computer programs that enable wireless telephone handsets to execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications, when they have been lawfully obtained, with computer programs on the telephone handset.
The full list of exemptions is here
There is a video game exception, but it only applies to those on PC's and only if used for security testing.
Note that the Librarian of Congress Rulemaking provision only exempts the circumvention provisions of the DMCA. The Librarian cannot exempt individuals from the distribution provisions of the DMCA.
So, while you can now legally jailbreak your phone, it would still be illegal to distribute the software program itself.
Google just posted to their blog what they're doing.
They also plan on maintaining their presence in China for sales and development, though they say that sales will be dependent on whether the