Your summary is spot on; it has hit a sweet spot with functionality/features vs cost. I am playing around with it to see exactly what type of offline functionality it may have. From what I've seen so far, the breaking point seems to be on the login; without an Internet connection you cannot log in. But once logged in, you still have minimal functionality. My hope is that in the event that users are already logged in and we lose Internet connectivity (but maintain wireless connectivity to local resources) that students could still access local, in-house servers. Since we host our own Moodle and SIS servers, we won't be completely down in the classroom.
Google also is supposed to be working on offline versions of Docs, so once they figure that out it will add an additional layer of offline functionality, but that's most likely only going to work if the users are already logged on. I highly doubt Google will release a local accounts caching server; they just assume that everyone has rock solid Internet connections.
I am also trying to experiment with installing another OS on it just in case Google drops the project. So far I personally haven't had any luck but I have read that others have. If I can get it to work, then I won't be stuck with a bunch of paper weights if they pull the Chromebook project and quit maintaining the OS and updates.