I don't get the feeling that this design saw much user testing. As you describe, the domain plays an important part in helping mentally filter results and thus doesn't really merit relegation to rollover visibility.
What I think would qualify for that is the rest of the URL path.
Overall, as nice as it all looks, there are some serious discoverability issues. "Show options" doesn't need to be shown in as much detail as Google has it, but the plus-sign itself isn't enough to go on. The rollover visibility for the other Google products just makes it hard to find them; the header isn't that noisy with them visible. The single gear for settings/sign in is a little better than the lone plus sign, but still, such condensation is extreme, especially for the importance Google places on getting users to use accounts.
I agree with everything you've said. Plus, the page is so javascript-heavy, it probably crawls in IE6. It already makes my scrolling a little less smooth. Interface responsiveness and discoverability trump flashiness and visual minimalism.
Other nitpicks: the slightly grey (cream?) background is a weird, subtle annoyance, and the lack of any underlined links would definitely get Nielsen's panties in a bunch.
One thing I think the (re)designer did get right: The AJAX-loading down arrow at the bottom of the page. I wonder if there's any reason Google hasn't tried something like this over their more traditional pagination model. I'm guessing it has something to do with advertising and/or existing SEO conventions of referring to result ranking by Google page #.
It's interesting to read the comments here, because I was involved in the design of a lot of these features, and many of the elements of "Air" have been considered and rejected for exactly the reasons that HN readers point out.
What I think would qualify for that is the rest of the URL path.
Overall, as nice as it all looks, there are some serious discoverability issues. "Show options" doesn't need to be shown in as much detail as Google has it, but the plus-sign itself isn't enough to go on. The rollover visibility for the other Google products just makes it hard to find them; the header isn't that noisy with them visible. The single gear for settings/sign in is a little better than the lone plus sign, but still, such condensation is extreme, especially for the importance Google places on getting users to use accounts.