This means pirates will be able to keep using the operating system indefinitely without actually providing a product key, nor having to put up with constant activation reminders. This will probably be a short-lived hack, though, as a similar workaround appeared and was barred from Vista years ago via system updates.
A Microsoft spokesperson said they were aware of the technique and were working to shore up the activation procedure. Of course, Windows 7 has been available on torrent sites pretty much from the beginning. Most of the torrent ISOs available online are already cracked using BIOS emulation tools and mods, which seem to be working well enough for now.