I think it's a brilliant idea. You lease computing power to people who need it, and the people who need it will pay for what they use.
The important thing to remember is that this isn't targeted at the average home user. The customers who are interested in this sort of thing are the companies/institutions/government agencies who need massive computational power, in bursts. Like the example in the article of the NY bank that runs loads of simulations during the day, but do they need to run those simulations 24/7? What happens when they aren't running any simulations? Their massive computing power goes to waste. By only buying what CPU time they need, they save on costs in a few ways:
1) No wastage of CPU time. If you've bought a $10 million cluster, but you use it only half the time, you're not making good use of your investment. Computers obviously don't need sleep, and as such you should be able to get them running round the clock. The problem that arises is ... have you got that much data to process? What if you process all the day's data with loads of time to spare? Your machines are going to be sitting idly till more data is supplied, which would be at the start of the next business day (in the case of the NY bank).
2) Maintenance is much cheaper. Something breaks, and it ain't your problem. Something goes out of date, it ain't your problem. Not only do you save on purchasing the necessary computing infrastructure, you save on the maintenance infrastructure as well. All those tech support staff are now unnecessary.
3) High powered computing becomes more accessible to the average institution. Let's face it, not every institution can afford a cluster/supercomputer. But there are times when a cluster will come in handy for a certain set of experiments/project, but they aren't going to be used loads after that. Thus many institutions can't justify the cost of buying a cluster for just a limited set of experiments. It is far cheaper to just rent the CPU time you're ever going to use.
I'm sure there are other benefits as well but these three are the most apparent.
Microsoft was trying to implement something like this (for the retail market) back in '96... '97... or so. You've heard the term "Software as a service" - this is akin to what they were touting with that movement.
The modern interpretation (from the MS perspective) is that everything is a pay-per-use webservice. Spell check. yup. Syntax check. yup. Print-to-PDF. yup.