The data URI hack is quite clever.
However, the UI aspect of instant preview lead me to disable it. There are times I'd like a quick preview of a site, but not every time I happen to mouse over something.
Currently, simply clicking on what seems like innocuous plain text puts the results page in preview mode, and it gets annoying fast.
Google does something similar in Google Reader. Clicking on some preview text loads that item. It's completely unnecessary since you can just click the title of an item to load it. Turning large areas of a Web page into links is disrupting on a page meant for perusal and decision.
