About bloody time! I'm amazed it's taken them this long to do something about that awful photo uploader, when photos are surely one of their killer apps. The number of (unanswered) complaints on their forum about this issue must run into tens of thousands.
But did it seriously require a complete rewrite instead of just fixing that woefully buggy Java applet? And could they really not have achieved this new implementation with Gears or YBP? They're rather vague on what was missing from those plugins, and I remember Google stating that they supported decent file upload functionality (including drag and drop) just fine.