This probably excludes pretty much everything except probably the most boring things - public information websites, etc. Anything within the DoD, for instance, will at minimum be tagged "for official use only", which already exempts it from FOIA requests, so I don't see this really opening much up at all.
DoD work can, in at least some cases, be open-sourced. We had some work with DARPA where open-sourcing was actually mandated in our contract (at our request), and that code was, for a while at least, in active use in the field. Although I guess research is a little different.
Whether or not it's feasible is entirely dependent on the project, though. Something that's ITAR/EAR (or classified) is never going to be open-sourced.
