Q: Is it perfectly alright to incorporate the whole FFmpeg core into my own commercial product?
A: You might have a problem here. There have been cases where companies have used FFmpeg in their products. These companies found out that once you start trying to make money from patented technologies, the owners of the patents will come after their licensing fees. Notably, MPEG LA is vigilant and diligent about collecting for MPEG-related technologies.
Sorry I thought you were suggesting that ffmpeg means that products developed by Google are not subject to license fees. We were talking about the future landscape of video not what happens now: Google are investing in the future.
E264 contains MPEG LA technology. Using ffmpeg for E264 would still mean that Google will pay fees/license the technology.
I'm sure Google's action is to encourage a practical replacement for E264. Then, at least, there is grounds to negotiate better licensing terms.
Maybe it's in the same vein as summer of code?