Some various comments on what people have been posting about-
1. On whether this is simply the next AppleWorks, or will become "bloatware", whether it competes with Office, etc.
I don't think this is really the right angle to look at iWorks. I don't think Apple intends to take on Office, or deliberately skirt Office either. They are simply developing the best productivity suite they can. Look at KeyNote for example (since it is the only recent Apple productivity app)- in most ways I think it is much better than PowerPoint, but at the same time doesn't have all the features of PowerPoint. But does that mean it's "cripped" or a "PowerPoint Lite"? Not at all.
Is Microsoft worried that KeyNote will trounce PowerPoint, eventually driving them to consider dumping PowerPoint for Mac? Probably not.
I guess they compete since they are the same class of application, but even if iWorks is pretty powerful stuff it will still appeal to a largely different userbase than Office. There will be some overlap, but I don't think Apple is trying to outsell Office. And they won't, and that won't matter. Because I have a feeling I'm really going to like what I see...
2. So what will we see? You can try to predict based on AppleWorks, but Appleworks is frankly so old that I don't think it's an accurate way of going about it. Personal computing has changed a lot since then, as has the general computer-using public. I think you should take a look at KeyNote, and that will tell us where iWorks will go.
I never thought there was any point to KeyNote, until I actually tried using it. I really like the program. I don't consider it necessarily more or less powerful than PowerPoint, it's just different- it's Apple's take on presentation software, and I like it a lot better than PowerPoint. It has less features, but its implementation of the features it has is far superior, which does make it a more powerful program for some (but not for others.)
If I had to slot KeyNote and what I think iWorks will be, I would put it somewhere in between Office and the lite suites. Remember that although these are the 2 widely accepted "classes" of productivity apps, they are competely arbitrary. If someone comes out with something different, then trying to classify it using these classes is not accurate.
3. Microsoft Office for Mac- Like I said, I don't think this will cause Office sales to drop horribly, as the 2 suites will still be very different. Although if iWorks is really, really good, then who knows. Since Apple isn't too big in the corporate world, many home users may end up picking up iWorks at the expense of Apple sales. Note that KeyNote isn't bundled with new Macs, so it's not a given that iWorks will be either (I have absolutely no problem with Apple selling iWorks as a separate item, unlike iLife which is bundled with new Macs but must otherwise be bought.)
However, I don't think fear of alienating Microsoft should drive Apple's decisions with Apple's own platform. You can only do that for so long, and at the end of the day Microsoft may still drop support anyway. Apple is still a drop in the bucket compared to Microsoft, and Microsoft does generate a fair amount of revenue from Mac Office (Microsoft has their own growth issues to deal with, and cutting profitable product lines is contrary to maintaing growth.) If Microsoft ever drops Mac support because it wants to fight Apple, well by that point Apple will be up to 6-7% market share and may have enough traction finally that having no Office for Mac won't be such a blow anymore.
Also, there's no good reason for Apple not to develop software just because another 3rd-party has done it- they have to do things for the greater good of the platform. Confabulator and Watson (just 2 examples) were not original ideas anyway, Apple had their own implementations prior. The important thing is to treat 3rd party developers with some concern and respect, which is why Apple has offered jobs to some of these developers.
