Few points, forgive the potentialy long post.
1) This makes total sense and is a defensive move from Microsoft. They simply can't risk people working out they don't need Office, especially in the enterprise. For that reason I'd expect the price to be reasonably competitive with competing products, maybe with a slight premium attached. Can the availability of Office on iOS damage Windows 8? Yes, of course it can. That said I really doubt it'd be the tipping point between buying an iPad or a W8 tablet, especially as it'd be available on both (and, if reports are accurate, might even be free on W8).
That hits the core of Microsoft's failure. It isn't Windows alone they are at risk of losing... they have started to lose Office users. People have long been under the illusion that "to get work done" you needed Office but with the advent of iPhones, iPads, Android devices and more everyone from the CEO on down at corporations are beginning to see that you most certain can survive WITHOUT Office and so begins the loss of Office and with it the potential failure of the entirety of Microsoft. They have stayed still far to long and this is a move to blunt it.
Read this editorial on this idea which is A) brilliant and B) better than I could ever express it...
http://minimalmac.com/post/17758177061/microsofts-biggest-miss
Here is a quote from it:
"You see, she said, missing all of the opportunities was just the start of a much deeper problem. Microsoft for many years had convinced the world that, in order to get real work done, you needed Office.
In fact, my many years of Mac Consulting was proof of this. To my clients, Microsoft Office was a must have no matter how much I tried to convince them otherwise. They had to have it.
Then, she explained, the iPhone came. There was no Office. People got things done. Then the iPad came. There was no Office. People got things done. Android came. People got things done. All of those things that they, just a couple of years ago, were convinced they needed Office to do. They got them done without it. And thus, the truth was revealed.
Microsofts biggest miss is not the lack of a smartphone, or tablet, or Office apps for iOS and Android.
Like the curtain finally falling from the Wizard of Oz to find just a small, frail, man pretending to be far more powerful and relevant than he really was. Microsofts biggest miss was allowing the world to finally see the truth behind the big lie they were not needed to get real work done. Or anything done, really.
And that will be what ultimately kills them."