It doesn't even decompile to "useable" code, but it does compile to code that will give you the gist of what what the intention was and what the actual commands are.

Decompilation to java is still a lossy process; if you want a non-lossy process you can check out APKTool which will encode/decode Smali (a Dalvik VM representation/assembly lang). But then you have to learn Smali...

You say that as if its a bad thing, smali is a pleasure to read/reverse compared to a lot of other "assembly".

On top of that, using this approach you can edit and rebuild the apk. jd-gui and company are nice, but often times I prefer to just skip ahead to the smali and really know whats going on.

Totally agree with everything you just said! I'm not down on Smali; obviously its incredibly powerful because you can tweak and baksmali. I just personally have no need to modify and rebuild Dalvik.