Good story. It'd be interesting to see a portable version (which I guess would have to either run on Mono or be rewritten in something else); or maybe Google will release some of theirs. I'm impressed that Microsoft had the courage to scale mostly-vanilla git instead of hacking Mercurial.
During the presentation at Git Merge Microsoft mentioned that the are hiring Linux and osx driver experts. This suggests that they plan to release the fuse driver themselves.