The FAA has now officially taken a cyanide pill. Good riddance to them...
The "interpretive rule" will not hold up in court. Given that the FAA has now gone to the point of erasing its only other regulatory standards regarding unmanned flight, we've got the Wild West going on now. Or do we...
The FAA has already had long standing standards for "unguided rockets". So Free Flight models will, for the purposes of litigation, get dumped into that category, which will serve actually to protect that discipline, since the low power rocketry regs are pretty minimalist (and no altitude restrictions).
For the R/C community, guess what? Your weight limit just went from 55 lbs to 254 lbs. You're flying an ultralight. Provided it's not for commercial activities, you need not registration, insurance, licensure, approval, whatever, and provided you practice see and avoid, you're effectively legal to go to touch and goes on the runway at the local airport (wouldn't recommend that, but the point remains).
Commercial UAS operation no longer requires a waiver under such a situation. It does require a 100 hr inspection by a licensed mechanic as well as a commercial pilot's license. Flights carrying cargo would have some greater degree of regulation, but whatever.
Bottom line: if we capitalize on this regulatory void, by the time the FAA figures out how big of a mistake they've made, there will be sufficient large scale UAV activity that a court would side with us and against them. So let's make it happen!