Sounds awesome for artists/musicians/creatives. Or paired with an easily-removed Logitech-style keyboard cover (which, unlike Microsoft's Logitech imitations, have REAL keys that feel like a laptop).
A MacBook Air has certain big advantages over iOS. But iOS has its own advantages as well. I know people with iPads and keyboards that are much better served by that than by a Mac. (I'd call them "low end" users, except they're doing some really advanced creative stuff with that touchscreen!)
If this is real (in the market, not just the lab!) I don't see it being a top-selling blockbuster, and that's OK. The iPad Air size is the sweet spot for me and many, but I'm sure there's also a growing niche for bigger-screen touch computing to fill!
EDIT: And I do NOT think it would go for the same market the Surface aims for (albeit some overlap of course). That's a poor laptop coupled with a poor tablet, and doesn't know what it wants to be. It's for traditional desktop software--or why bother choosing one? Kind of neat in a way, but almost never the best choice. A true competitor to Surface would be a touch-based Mac (please no!) but I see little need for that in the near term. A larger iPad would be just that—with all the benefits of ease and app ecosystem that the iPad already has over Surface. What do people do with an iPad now? Do it bigger!