Neat, and works well for the toy example with 4 tabs open. I don't really think it would work as well for the "tab collectors" as they think. They seem to be aware of this too, since none of the screenshots in the post have anywhere near what I would consider a significant amount of tabs open. I use the tree style tab extension on Firefox[0], which I cannot live without. Horizontal tabs become useless after about 15…
In old Firefox it was possible to have multiple rows and variable width tabs. So there was no horizontal overflow and tabs could have been wide enough so that title fit into each. I wonder if it's possible to get this back.
Design-wise, it's still a more sane layout than the single row scrolling on overflow. It's also the solution most other programs and GUI toolkits use, with browsers being the exception I can't explain.