I'd heard about this in the local news (I'm from Portland), but didn't hear the whole scoop. At first I heard that slow service would be offered for free, but faster speed would be available at a cost. This article doesn't mention the speed, only ads. Either way, I not sure it will fly. In my ultra-socialist SE Portland neighborhood, just about anyone that had broadband offers it up for free to the community via wifi. It's actually an organized movement. (more info at www.personaltelco.net)
It will be interesting to see if people who currently pay Comcast for broadband and share it will be tempted by the free service with banner ads and shut of their Comcast service. If they do, the Personal Telco Project network will get smaller and smaller..
I think speed would be an important factor to consider. If you get a decent speed but have to view some ads, I think people wouldn't mind. Presentation of the ads would be important to me too. If it's a persistant banner or something similarly obtrusive, I would be more apt to spring for a paid service.
That's awsome that people share their broadband connection via WiFi on purpose though. A lot of wireless networks here (colorado springs) are just left way too unprotected.