They should finish working and polish up Ubiquity before they move onto this... Ubiquity was really nice.
While the idea behind this is very cool, I find the actual interface to be appalling and overly complicated. Also the usage of things doesn't seem as natural as they make it out to be. At this point most people have used browsers so trying to reinvent them in this style is the wrong way. Though I admit that with some time and polish it could be better (as with most things).
Would it be possible to recreate something like this as a Chrome extension?
I doubt that. From what I know Chrome has no skinning support. The only thing extensions can do is to add button/icon next to/into address bar. So unless Google decides otherwise something like this won't be possible.
I like the overlapping row of tab thumbnails at the top