Does this imply that it would be possible within the UI (if Nacin's plan went ahead) for us to choose on an individual site basis whether to use sub-folders or sub-domains? I actually do that already on my own site as it is possible via the existing domain mapping plugins, so it should take much extra effort to get it to work within the UI (I currently manually map the sub-domains to their corresponding sub-folders.

This actually has a distinct cost benefit for those using https on their admin panels, as it means you can use a regular SSL certificate instead of requiring a wild card when using sub-domains. This is because you can use sub-folders on the backend, whilst using mapped sub-domains on the frontend.