If I read that correctly, if you use Google+ to share a picture of yourself with your two closest friends, they are giving them the legal right to use that picture in a world-wide advertising campaign. Or show it on a Jumbotron at the Super Bowl. Or email it to your boss. That's unlikely, though. I don't think Google in its current form will abuse that right.
However, since many current users are likely to outlive Google, a real problem will arise when Google fades away sometime in the next twenty or thirty years and is acquired, or Google+ is spun off into a company that then goes bankrupt. All content ever posted will be treated as an asset to be liquidated in the most lucrative way possible.
In other words, Google+ is just like Facebook, and you have to treat everything posted there as "eventually public." I think most people already treat Facebook as completely public because they're friends with people they don't trust, and they are hoping Google+ will be different. Apparently that hope is naive.
Nevertheless, Circles is still the best thing since sliced bread. It doesn't help with privacy much, but it lets me avoid spamming people with posts they aren't interested in. Family stuff goes to my family, geeky stuff goes to geeky people. Circles is for targeting your posts to the right people, not for privacy.