This is an incredibly disruptive thing for Amazon to do. They've just brought near-government grade crypto-breaking capabilities to the mass market.
No, they really haven't. Near-government grade KDF-cracking capabilities will be when Amazon announces FPGA Compute instances.
In an interesting twist, The Register claims that Achronix's decision to use Intel was driven in part by national security considerations. We've reported extensively on the idea that chips fabbed overseas in insecure facilities could contain hidden kill switches or backdoors that would let an opponent cripple the US military, and Achronix allegedly wants to be able to sweeten its pitch to military customers by offering a home-grown solution.
[1] http://arstechnica.com/business/news/2010/11/intel-shifts-st...
Cool stuff, and all the more intriguing considering that Intel's getting involved.
Bang-for-buck is pretty much the name of the game in brute-force cracking. You're right that NSA probably doesn't have any budget constraints, but they'd still be interested in getting the most hashes/second possible out of $10 million.
Basically, if your WPA network is vulnerable now, it already was vulnerable. A decent password and non-default ssid will still slow people down.
For every instance you an go out and get they probably have a football field sized room full of stuff twice as fast.
The major powers have particularly good access to kit and people. There's a significant number of countries for whom this is actually more than they have (in fact I know of two or possibly three countries where the full capabilities definitely supercede existing ministry of interior type capabilities).
Are there legitimate uses for password cracking or is this about getting access to other people's accounts?
We sometimes crack passwords to do a password strength audit. Sometimes dictionaries aren't really enough (as someone might have chosen an obvious word in another language) so it's easier to just crack the passwords, automate analysis of the obvious and then scan through anything left behind.
WPA-PSK cracking is particularly useful in the UK Local Government sector, where local government in most cases needs to have an annual penetration test, often including their wireless networks. A lot choose WPA-PSK because it doesn't mean spending money on a full-blown wifi network.
The other thing we use password cracking for is when we do incident response work. Sometimes people encrypt things like documents or use PGP containers. This isn't quite making PGP cracking feasible, but certainly the majority of encrypted word documents should be doable with this.