I think Steve does a better job about explaining why JS is less painful on the server side; read up on it. (It's short for a Yegge post.) I'd love to see the core class extensions they've added in Rhino; I wonder if that will be submitted back upstream. I know simple stuff like map is getting included in Firefox's JS engine; it actually might be in it already. The other fun functions aren't tough to implement; the real trick is getting them done in a consistent way so they gain traction and mindshare. I kind of doubt if this Google project has a great deal to offer technically over Helma, (in fact, if they copied Rails' routing, it could be at a disadvantage) but it's definitely got plenty of momentum and public attention pushing it forward, which is at least as important.
Side note: Foo Camp looks awesome. Should be on the watch for any incarnations of Bar Camp in the area.