Yes, its very cool that Yahoo is opening up its search feed to developers. Ultimately though they are facing an uphill battle once this feature is out of the novelty phase, for a number of reasons:
-The majority of bloggers and web entrepreneurs are interested in immediate revenue, which this service will not be able to provide as well as other CSE.
-Google already offers a custom search engine with a fully customizable template and fully customizable advertising. Google advertising is also already the most lucrative for web publishers.
-The 'social search' feature, which in my opinion, is the ultimate distinguishing trait, requires widespread adoption of the APIs in order to be effective
-web users (who aren't e-marketingers) are tough to switch over to new web search technologies.
Like many of the other search and discovery novely sites, this may gain some traction with e-marketer/blogger crowd, but in order to be effective, it will need Joe Shmo web user to use the social search feature, which won't happen until bloggers promote their custom search engines, which won't happen until Jo Shmo web user uses the feature, which.... get where I'm going?