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BTW, Time Machine looks really cool. I assume that means that you never really delete anything. What if you want to clear space on your machine?
I would expect it to flag stuff you want deleted and when you want to write new data it overwrites the oldest flagged files. This way you can recover things you've deleted recently as long as you haven't written lots of data to fill up the drive since then.
That is what I expect anyway, I may be wrong. I'd imagine it would just be a glorified undelete.