Well, that sucks. I was psyched when I first read the subject, since I figured they'd be lending Google Docs their awesome text editor. Instead they're going to Google Wave, where the interface blows. Etherpad's lightyears more useful, more flexible, and more valuable. Blah.
The Etherpads themselves were very impressed with what the Wave guys showed them, and they are the best qualified to judge this sort of technology of all the hackers I know. Maybe some of the stuff they saw was unreleased, but whatever it was was, the Etherpads liked it, and they seem genuinely excited to work on it.
These transactions trade on the goodwill of early adopters. And they make it harder for other startups as potential early adopters start to assume that it's better to wait for what Google releases instead of investing time in a product that will be scrapped either if the company fails or is successful and acquired.