I think you make excellent points, and may actually be proven right-- but I happen to disagree with your conclusion that this is doomed to failure.
This thing is a netbook. Gramma can't even see a screen that small, much less aspire to getting frustrated because it won't install Quickbooks. Moreover, since it's a netbook, the vast majority of people will be using it as a secondary surfing/email device.
Sure, some cheapos will be dumb enough to try and use something with a 10.1 inch screen and a reduced size keyboard as their primary PC, but most people will be using it for web access while wandering around the house, or as a coffehouse/travel computer. For those purposes, it really should more than suffice as is.
I agree that subsidized devices have failed in similar segments before-- either failing outright, or struggling because people created simple hacks that removed the crippleware that subsidized the device.
However, the incentive is different here. I really don't expect google to deliver a crippled device. It's just not how they think. Android is a pretty efficient OS, I imagine Chrome OS will be materially similar. A year from now, most devices in this segment will be running Win7 on similarly spec'd computers. THAT'S crippleware. Unless you expect Apple to release a $300 netbook. :-)
This thing will be markedly superior to any similar product within phaser range. The vast majority of users will have far more incentive to leave the device as is.
I wonder how much google will have to subsidize the system anyway? You can already get a netbook with nearly these specs for under $300. By the time this thing comes out, I expect these specs will be pretty much mainstream, if not behind the curve (maybe not the 64g SSHD-- but the price of that should be far less next year).
I agree with you on the "where's the payoff for google?" front. I'm not sure I see google's play here, besides making the world more agnostic to OS's, which hurts google's primary enemies, Apple and MS.