Anytime there is more competition, the consumers benefit. As long as it is a legitimately done clone, I think it is a good thing for the industry. I am sure there will be tons of issues to iron out. This may be their learning process.
I would not find the clone they have depicted as interesting. When sold installed in a board, it diluted whatever price-advantage their CPU offers. Beside, I wouldn't want a board that I cannot replace a blown CPU.
Personally, I prefer to see a dip drop in replacement that enhances the original - like the way Intel (and competitor) CPUs were in the early x86 era. Motherboard permitting, one can drop in a 90MHz and replace the 66MHz P4/P5 and off you go with bigger/better system. Say, with this enhance CPU drop in, you have 2K of ram instead of 1, or 48K of flash instead of 32K, or a 12 bit ADC instead of 10... That approach may take the market by storm. Those with a Arduino board may find it a lot easier to buy another chip to plug into their existing board then purchasing yet another. With that, they can builds experience for their designers, market understanding, and builds name recognition for their product (AMD, etc vs Intel) along the way. Eventually they would earn enough name recognition that they can sell a CPU entirely of their own design instead of a work-alike of someone elses' design.