The Knol service is an interesting idea from Google, but like some of its other ideas could as easily disapear before it ever even reaches a Beta stage. It is likely to hit public space at some stage though or it would not likely have announced as they did.
Of the discussions on the topic, the Ars one is probably the most succinct. This is not a stretch into a new area for Google, just a slight twist on what it already does. Blogger already provides a managed format for the publishing of user content, this simply does the same thing in a different format. They have also tried something similar before with Google Answers.
Much has been made of the possibility of Knol being detrimental to the survival of other reference or guide sites like Wikipedia or Mahalo. There may not be much to fear here as the intent for Knol is for it to be unmoderated with the possibility of multiple entries for a specific topic. Popularity factors will then determine which article acheives primacy. This system has less chance of delivering correct results than the current alternatives. While the chance of a share in ad revenue may attract experts to post, the best answer will be chosen by the people that read the articles; most of these are likely to be unknowledgeable on the topic meaning their selection of best will be either: ill informed, a guess, wrong or confirmation bias.
The alternative methods offer no guarantees either, but have a better chance of a correct result. By having a single article per topic Wikipedia forces disagreement to be discussed in the open and some form of consensus by the experts to be reached. By moderating what appears at the top of a list Mahalo provides editorial oversight. The primary attribute of comparison for a reference site is accuracy. If Google does not come up with a way to ensure their accuracy that is more reliable than ‘crowd-sourcing’ they will struggle to compete with other services despite their other advantages.
It is difficult for a company the size of Google to release a new product that does not step on someones toes as they no longer release true niche products. This is a downside of being big that is more than made up for by their access to huge resources. To feel sorry for them for this would be like feeling sorry for Bill Gates getting his income tax bill. It is however the reality of entering a new business as a large company that does not necessarily make them evil.