Also, by re-federating the service of Facebook with partner companies (push pics back to flickr, status back to twitter, etc.), they could get some nice allies, reduce the bandwidth requirements dramatically, and allow granular control of users in a very clear and powerful way (flickr is set to private, for instance).
Neat idea. I'd love to see it kill facebook. If there's an elegant way to detach online socialization from the profit motive while maintaining functionality, it would be good for everyone not employed by facebook to see it succeed.