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> "Don't Be Evil" is not Google's motto

Ahem. This[1] is close enough to a motto to make this part of your comment irrelevant.

[1]: http://en.wikipedia.org/wiki/Don%27t_be_evil

> no, they couldn't do it without breaking the XMPP.

Why not? XMPP is pretty extensible, and Google's Jingle spec was open. Is there a technical reason that Hangouts had to be based on something other than Jabber?

Are messages from your XMPP client going to users of the Hangouts app and vice-versa, though? The e-mail implies that users of Hangouts can still continue to use XMPP clients, but that they're connecting to a totally seperate XMPP-compatible chat system by doing so.

Whether or not "Don't be evil" is their motto, it's clear that they've failed to manage expectations.