I see this kind of thing as nearly a total win. But to fully get it, you have to put all the pieces together.
Apparently, a big piece of iCloud is streaming media. The owners of that media do not want to allow the "scan my library and then link me to one master copy of every song" option because they'll assume we're all pirates. There's no real way to reasonably prove that all the non-iTunes-store purchased content was genuinely purchased. Yet, iCloud for the iTunes benefit is a bust if ONLY iTunes-purchased content can be stored and streamed.
A digital locker where we upload our own copies of the rest of our media libraries is a situation where an Apple service may be facilitating the use of pirated content. So giving us the space to upload our stuff onto Apple servers may have some legal risk for Apple. I bet Amazon & Google will feel some pain soon for this very thing.
Furthermore, storing everything in the (off site) iCloud comes with the downside of high bandwidth burn when your Internet access gatekeepers are increasingly pinching "unlimited Internet" down into tiers and "per GB" fees.
So how do you solve those 2 problems and still sell us on an iCloud service? A local piece of the iCloud (this TC solution) for non-iTunes-purchased media and non-local storage of the rest on Apple servers seamlessly presented to us users as if all of it was in either place. Do the software right and even the "NOT for dummies" user won't be able to tell exactly where any given bit of iTunes media is coming from.
In this scenario, Apple legal risk is near zero as they aren't hosting any media they can't prove each iCloud user owns. Each user gets to enjoy ALL of their media via iCloud instead of ONLY the content purchased via iTunes. And, potentially, there is a fairly strong reason to buy new hardware for Apple to make it all work.
And with most of your media stored on your local cloud, you don't burn any bandwidth when access it at home. Furthermore, this local cloud gives users the potential for the non-computer access to all iTunes media (such as the popular want of NOT needing to leave a computer running to feed media to an

TV).
My guess is that the cost of the local cloud is the cost of a TC plus the $25 or so annual subscription for iCloud services (which would mostly be sync services if you choose to store all of your own content only on this local iCloud). I for one would be very quick to pay up for an Apple-friendly iTunes media server with NO other features than just sharing one media library with all of the devices within the house; for some time now, I've been right on the edge of paying up big for a Drobo or Unraid. And Apple central store with lots of Apple software niceties is a complete win- even at TC prices or more.
If you want to store lots of other files (probably non-media to keep the legals under control) off site, there is probably going to be per GB or tier fees much like iDisk now. That would still give you a way to backup everything off site if you want... but "everything" will come at a pretty good added cost, probably scaling per individual needs. I can't figure out how this model could backup your iTunes media NOT purchased from the store and still be acceptable legal risk, but maybe using iCloud for backup purposes only- NOT streaming- is a way to implement a complete Time Machine OFFSITE backup solution through iCloud (for those that want offsite backup).
Thus, the cheap option for iClouding all of your iTunes content is to buy the new TC device. The more expensive variation is to rent big space on Apple's servers to function as off-site backup. I bet this will be a classic rent vs. buy pricing scheme that will make buying new hardware from Apple seem like a bargain.
I'd also guess that a software upgrade would probably be available to bring this iCloud functionality to existing TC and AEBS users.
Net, I would guess that we can choose NOT to buy TCs and store it all on Apple's servers at a pretty hefty price if "it all" is a lot of storage. I would guess that that rental will look weak vs. buying a TC and storing most of your stuff in the local cloud. Either way, Apple makes lots of money whether you store it on their servers or in a hybrid between their servers and your own personal iCloud (TC).
There is a bandwidth burn downside when the local cloud storage is having to send data to you via Internet (as you are burning it on the upload and the download) when you are away from home, but this will only be a problem for people who are on-the-go streaming more often than at-home streaming. For each person that that describes, they would probably want to choose to rent more iCloud storage on Apple's servers and store less at home.