Electronic viewfinders... no no no!
One of the major attractions of DSLR over digital compacts is the optical viewfinder. Composing with the LCD on the back of a compact is a nightmare, and although those with electronic viewfinders you can stick your eye too make composition easier, the quality is terrible. Even with a high quality LCD in them, they're no match for the resolution, detail and colour of the real optical world.
"I thought it was a bit of a universal truth that if you shrink the sensor size, you 'worsten' the final image quality. Thats why your typical EOS 1d has a full sized 35mm sensor for maximum effectiveness. Are they not shrinking the sensor size with this new micro four-thirds design?"
Theoretically the image quality should be the same given the same amount of photo cells regardless of size (assuming they read the same detail), however the smaller the sensor size the more noise you introduce due to interference on the sensor between cells due to higher density. Although it may be technical advances can counter this.
As for the micro four-thirds, the article mentions it having the same size sensor as four-thirds. Although this usually is still 1.5 or 1.6x smaller than 35mm "full-frame".
In general though the noise introduced by the size of the sensor only becomes a factor when blowing up to large poster sizes. For your average Flickr user or 6x4, 8x10 print, even a compact with an even smaller sensor is perfectly fine (if it's a good quality sensor and camera).