As a Tarsnap customer, would this allow you to stop charging on sending data to Tarsnap, or does that still cost you somewhere in the lineup?

Tarsnap's upload costs cover the actual bandwith costs, the per-operation cost of S3 PUTs, the SimpleDB operations for checking account balances, some data storage (when you delete data, you stop paying for it; but I pay until the garbage collection job reaps those blocks)... there are lots of costs. The bandwidth was a significant part of it, though.

I need to crunch some numbers and see how the economics work out before I can commit to anything, but I'm certainly looking at adjusting the pricing.

I assumed there was more to it than just bandwidth costs, just wanted to get an official answer. Thanks.