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Okay, think I'm now willing to agree with Kali Yuga and MurrayPaul on this one; the scanning of millions of books was probably fair use (although maybe not since it wasn't litigated), but the provisions in the settlement agreement about orphan works isn't. It's unfortunate though, because I think the system the revised settlement agreement (an orphan book registry) would have done a lot to eliminate the problem.
I think some of my confusion was around the fact that I don't believe Google is actually doing anything with orphan works since the last settlement agreement got shot down, and has effectively abandoned that aspect of the project. That, plus the fact that it may not even be proper for Google to scan millions of books, added to the above.
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