I can certainly see that this would be very helpful if you have boatload of bookmarks. Great way to organize. I personally only have a few bookmarks at present so didn't feel the need to use Del.icio.us. This "thing" also helped me to understand tagging better.
As for application in Libraries...this would be an efficient way for Libraries to help customers with important and/or popular websites that are used frequently for research or answering questions. Each library could just add to the list as sites are discovered and make it available not only to staff but to the customers as well.
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