Interesting. Sounds pretty much what MS had planned for the XBO before all their users had a collective cow. I think it actually makes a lot more sense for a platform like Steam. I mean my library is 131 games and counting, most of which I haven't played in a ages (some not at all--thank you steam sales!) so I can totally see myself authorizing my brother's macbook so his kids can have a nice selection when they visit or whatnot.
Reading the FAQ, they're obviously going to have to be very selective about which games can and can't be shared. Also, totally understand why you can't both be playing the same game at the same time, otherwise it could be exploited so co-op and multiplayer games like Borderlands 2, L4D2, Saints Row, CoD etc. need only be purchased by one person then shared out.
Actually, I wonder why they don't just specifically restrict co-op & multiplayer games and let people play SP games as and when. Perhaps that'd be to complicated to implement, or there's still potential there for exploiting since it'd effectively be like giving a free copy to someone.
I do however wonder if this is partly their way of testing the waters for full on, permanent game trading/re-selling. That could be interesting...but I'm not sure how happy publishers will be with the idea. Maybe if Steam takes a slice of the price like they currently do with the current trading card market and pass a percentage back along the the developers it'll keep them happy.