Personally I've been using it for a while and its indeed living up to its promises, but ymmd.
It is indeed an overlay network by the simple rule of that being something that people can use. Technically the guys require the underlying protocol to keep order (one after another) in the packages for the stuff to work. Which is why building it on top of tcp/ip makes sense. Note that the ordering requirement is likely to be removed in a future iteration, again this is a research project.
Ideas like doing a mesh using antenna's in your city are thus, for now, out of reach. But the core concepts and approaches will likely map very nicely to such a usecase and the lessons learned as an overlay will help such a future design.
The public network is currently around 4000 nodes, which is why "scalable" is indeed meant to be vague. Tests of a million nodes are going to be required, probably in a future protocol iteration, to make clear statements about how scalable it really is. Signs are good, DHT usage is still very low while we saw a doubling of network size in the last 6 months.
In short, I use it daily. It works for me.