I was very confused about the download fees, so I asked Amazon and got this reply:
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The $1.99 per title download fee does not apply to International customers. This fee only applies to U.S. customers traveling internationally. Also, if an international customer uses a Kindle International outside of his home county, he will NOT need to pay a download fee. This also applies to U.S. customer only.
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So basically the way it will work is that you buy a Kindle International and register it to a particular country. If you register it in the US and travel outside the US you will pay an extra download fee. But if you register it in another country you don't pay any download fee either at home or abroad. However, it seems that books have an added $2 above US prices and less selection if your Kindle is registered outside the US, so you are essentially paying it anyways. Subscriptions are a bit higher but at least not $1.99 per day more.
My thoughts are that this is still a useful alternative to those with no US credit card to be able to participate in the ebook market. It beats paying almost $10 shipping to buy a physical book from amazon.com with 3-6 weeks international shipping. For me, I have a US credit card so I think I'll just stick to downloading on my computer for now and save the two bucks.
It also seems to be a bit strange that the international wireless surcharge is so high even in places where data plans are much cheaper than in the US. For example, I'm in Taiwan and pay about US$23 a month for unlimited 3G data plan without a voice plan (I pay per-usage for voice). That's compared to my friends in the US who typically pay at least $70 a month for data and voice.