I'd agree it "smells" more like a bug than a feature, since there is no graphical cue that you are actually pressing a key, also, holding the key doesn't cause a popup of letter variants like the ÿ.
Also - why is this HN front page material??
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Do you have a new iPad (or iPhone 4S) with Dictation turned on? Try this one: Press and letter and then the microphone button quickly and repeat. Instead of interrupting your quick typing, it will register the press as a space instead.
Apple pays attention to the details.