Nice!
I'd love to play with this my only gripe is that if you try to change the pitch too much it will sound like shite. Also will it sound fake with guitar solos? what about bending of notes, double stops, slides, pinch harmonics and other nuences which could be hard for the software to pickup.
The demo looks good but they only show simple chord strumming and clearly defined fingerpicking. I will definately check this out though, but I seriousley doubt it will mean the end of guitar playing as we know it.
I've been playing around with sampled instruments for a long time using a program called gigastudio and that technology is amazing, the problem is to get it to sound real though.