I think I'm right in suggesting it's free with a bizspark licence, which is a kind of a free licence available to startups.
Whilst the platform (Azure) is clearly proprietary, they're clearly making efforts to offer cross platform IaaS and cross platform client (OpenSource) capabilities for their PaaS offerings.
It maybe a crock of shite, it maybe the best thing since sliced bread but I for one feel that that particular team deserves credit for trying (hard) to adopt open source and make themselves an attractive proposition outside Microsofts traditional core strengths. Time will tell if they're make a success of this...
There are already solutions that can mount s3 as file system, for years. I know it is more widespread but I work for Microsoft Azure and I provided a solution that didn't exist for Azure.
Could you provide some outages you're referring to for S3 reliability? I've been using it for the last 4 years and not had a problem.
My experience is also backed up by Nasuni's Cloud Storage Benchmark from December that report that AWS has 1.4 outages a month (compared to Azure's 11.1 a month) and concluded that AWS was faster than Azure (AWS & Azure being the top performers)