Looks pretty cool, and the physics are a nice touch. Honestly though, I'm pretty skeptical about people being able to create much of a variety of games unless they can do basic scripting. Still, there's a lot of 'remix this game' possibilities.
It's like myspace layouts + flash gaming. I think people will love it.
People who are talented enough to make good web games already have a tool to do it with - Flash (typically a pirated version). It's not a perfect tool, but it's very flexible.
I agree that the physics in this thing look great though.
This isn't for people who know flash. This is drag and drop game creation. They might have solved a really hard problem here.
I don't think so. I've been doing games for a lot of time and in the amateur game dev communities, users tend to like simple and sometimes bad games that are made by their community friends.