(To clarify, I'm talking about iOS 8 here, not the way it is under iOS 7)
My understanding is that iCloud Photos isn't going to maintain your entire library, in full resolution, on your iPad. It'll have thumbnails so you can browse, and maintains a cache of previously viewed images in "device-optimized" sizes (the resolution isn't going to exceed the resolution of the device's display). It only downloads what you need, when you need it, and keeps it around until the space is needed for other purposes. If the image hasn't been accessed for a while, iCloud will eventually remove it from the iPad.
For example, if the photo was uploaded to iCloud from your iPhone or desktop computer, and you've never viewed it on your iPad, the only thing on your iPad is going to be the thumbnail.
It also seems that, if you opt-in to the new iCloud Photo Library, your Camera Roll will be replaced with a "recents" album. So those hundreds or thousands of Camera Roll shots you never view? Those will be up in the cloud, and will automatically be removed from the iPad.