I feel like this should have been expected.
Now, the premise of a Google OS is not new in the least. As recently as December, rumors of a Google OS abounded when a statistics tracking firm, Net Applications, detected a significant amount of traffic out of Google HQ—with OS information hidden. Similarly, rumors of a Google Browser were fierce for years until Chrome was released last September—and Google had apparently been using it internally ("dogfooding") as it grew and developed over the course of two years.
When Google officially announces the project tomorrow (Wednesday), I'll be wary of the hype—Google doesn't do it themselves, but everybody else seems to hype their products up quite a bit. And I'm sure that misconception/misrepresentation will be rampant on Twitter and around the Web.
I'd like to point out that it's called Google Chrome OS, implying it's an extension of the Web browser. It's going to use a Linux kernel, but operate Web-based in terms of software. (Think apps like Google Docs and Gmail, but for all of your standard computing.) They swear they're making it a full-fledged OS that'll run on things from netbooks up to full desktop computers—but I find it hard to not emphasize the thin client/netbook angle, as they admit they're targeting netbooks first. (Which, too, is unsurprising since netbooks are hot but the OS market for low-end hardware is severely lacking in quality and/or user-friendliness.)
Side note: (Taking off the "newsroom Web developer" hat, putting on "online news consumer" hat...) I like the fact that the New York Times article links to Google's blog post in the lede. I love seeing news sites externally link like that. I have a Wikipedia-induced habit of middle-clicking bunches of in-text links that I think are relevant or interesting; that's just being helpful to your reader.