the rationale behind this was:
getting java used for more stuff, by more people... I think it was suppose to be a loss-leader, butit never got you to buy anything! The problem with A LOT of Sun's projects like this is that it has a vary "Sluggy Freelance" approch:
1) make free MMO engine
2) ???
3) PROFIT!
As neat of an idea as this was, It should have been nixed a while ago.
To address your last paragraph, Oracle has commited to contenuing Sparc (it runs oracle well), Solaris (It runs oracle well), and java (it runs on Oracle). This type of stuff will spin off into community-projects, which is great for loss-leader projects anyway... you get all the "leader" with none of the "loss!"
I for one welcome our Microsoft-trash-searching, bigger-yacht-building overloards.