I think there are plenty of gotchas which authors need to carefully consider. The $$$ and numbers Amazon are chucking out there seem good but who knows exactly how likely it is that you'll reach their illustration. Not very - my suspicion is.
Even if you achieve the 1,500 borrowed in their example I suspect the pool will be much larger as I don't think anyone but Amazon know how many Prime subscribers they have who are downloading books from their lending library. It might be more attractive if you were offered a consistent 10c for each lent copy rather than entering into a lottery.
Lastly, I can't help feeling that Amazon is using this as leverage over mainstream publishers to join the programme. Which may or may not be a good thing.
For my own particular case, it looks good as my book is mostly of interest to Kindle readers.
Edit: Mark Coker of Smashwords has posted an insightful piece:
http://blog.smashwords.com/2011/12/a...-with-kdp.html