A free/Open source clone of the most successful virus ever created! Basically, these guys decided they legally wanted windows, but they didn't want to pay for it. It's a cool idea, but, I'm not exactly sure on a) the legality of it and b) the usefulness of it.
I don't think there are any legal issues here (but IANAL), and I can see a free Windows clone being useful to some people. However, Microsoft has a 25-year head start so these guys have some serious catching up to do. Until Microsoft goes out of business, I doubt they will ever have a system compatible with a current Windows version.
Just imagine how many patents Microsoft will be compelled to use against this project if it ever becomes a perceived threat.
I am sure all MS's EULAs prohibit you from running Microsoft software on anything other than Windows.