I signed up to learn French yesterday and have been playing around with it a bit. I also had a quick look at the German section. Here are my thoughts:
As a language learning tool
It has some obvious flaws and is somewhat one-sided, but I think it would actually be a good way for me to improve my passive French. Translation is just one element; there are also gap-filling and listening exercises.
The translation exercises are good fun. Your translation is compared against translations that have been rated as correct by others. If your translation does not match up with the existing translations, it says "Oops, we can't tell if this is correct" (not "Your translation is incorrect"), which is nice. The mouse-over function encourages word-for-word translations, but then so do good old-fashioned dictionaries.
As a translation tool
If enough people sign up, and if enough of the translations are rated by others, I can see how this might work (the wisdom of the crowd and all that). I imagine the results would generally be better than machine translations but not as good as the work of a decent translator.
The main problem I see is consistency - the texts are separated into individual sentences, translated by different people, and then (presumably) put back together based on the ratings for the individual sentences. I suspect there must be a way to address this problem technically, and perhaps they have, but I can't find a way to see the complete translation of a text (how did you do that in #10, CM2DD?)
I'm not entirely sure how they propose to get enough people to rate other people's translations (though looking at some of the existing translations is pretty hilarious, so maybe people will do it for entertainment: "Sorg für mich, Sozialsystem" - "I worry for myself, socially"). Incidentally, the best-rated translation for the above sentence is "Take care of me, social system" - not as good as someone else's "Look after me, welfare state", which I was the first to rate at all.