The standard must offer comprehensive protection of protected material in any format, but they removed the requirement that all copyrighted material be protected.
The way that I read that, it would be OK with the standard if plain text did not have protection. But the protected equivalent would not be allowed to be copied etc by any legal implementation.
Technically what makes this a non-starter is that every program that is capable of copying or distributing data over a network must somehow be blocked if it contains a signature of something protected. Likewise it would be illegal to write a program that made protected data look unprotected. (Like, for instance, any standard existing compression protocol.)
Remind me to get around to writing a letter about it. My basic feeling is that, "A committee of senators can issue a finding that this bill is economically feasible. They can also pass a law that PI is 3. Both have the same effect." If there was one person who I would want to testify on this, it would be Andrew Odlyzko for his [link|http://www.firstmonday.dk/issues/issue6_2/odlyzko/|Content is NOT King] who can lay out in black and white why keeping communication costs to a rock bottom is going to inevitably work out to the best overall economic win. (And his research helps explain why people are - today - willing to spend an order of magnitude more on email than they do on Hollywood.)
Cheers,
Ben