How many people use even 50TB of storage on S3? Never mind 500TB+?

I don't, but some people certainly do -- smugmug had 80TB stored and was growing at 10TB/month when Amazon wrote their case study about smugmug: http://aws.amazon.com/solutions/case-studies/smugmug/.

That was my first thought - they have so many big customers that their tiered pricing starts at 50TB?

Actually, I've just worked it out, you could host around 1.02 billion small (50KB) images in 50TB. Quite a lot, but for a photo site like flickr, thats only 12 million 4MB original photos, not including the smaller versions. (well — thats still a lot of photos, but I bet flickr swallows that many photos every week...)

Not people; companies (I'm thinking of Heroku here).

a company that wants to use amazon as their CDN with amazon's delivery service doing the heavy lifting? who could use the price tier to offer a discount to a smaller company who didn't need that much, perhaps? if a company could wrap that service in an easy-to-use interface and could offer a discount from lower-tier pricing, it might look like a thin-profit and low-maintenance business model.

anyone deciding to do this, based on this comment: i demand a beer and sammich as tribute.

now, if amazon could only stay online ...

We have an image storage/sales service that uses S3. We're about 6 months in and have just under 1 TB.