"when the user has installed a VP8 codec" is an interesting caveat they made sure to mention twice. Is the user going to have to download something additional? If they have another browser installed with VP8 support does that install it in a way that IE will use it? If it doesn't ship with the browser, its nice that they will support it, but it's not as big a deal as shipping with support built-in.
Microsoft shoves so many automatic updates in Windows as-is... they ought to just shove a codec down that pipeline too. Unless they still want H.264 to win...
Is it possible to detect which codecs are installed using javascript? Having to throw up a "You need to install this thingie from over here" is bad, but a lot better than just getting a default "something is broken with the file you're trying to play" message" a'la Windows Media Player.