I have just looked at the Pathfinder "Beta" Playtest edition, and with the exception of some changes and additions it is a clone of D&D 3.5 Edition! I know people said it was SIMILAR, but I had NO IDEA...! WHY would WOTC allow Pazio to, in effect, re-release 3.5, thereby competing with their own 4th Edition? - It makes no sense to me... yeah, it's cool that people that don't like 4th Edition D&D will have an alternative, but I don't see what WOTC gets out of the deal... and I know about the OGL, but I thought that just allowed 3rd parties to produce material compatible with 3rd/3.5 Edition... not re-print the core game rules outright!!! Am I missing something here? Am I a clueless berk? Will Pathfinder be able to use iconic monsters such as the Beholder, the Mind Flayer, etc... in its rules? Will the Planes of the Great Wheel have their traditional names and qualities (i.e Neutral Good Elysium)? Please clue in a VERY confused berk...
Pathfinder and OGL... why is WOTC allowing a 3.5 clone???
Also as a licence it can't be revoked.
Hmm... odd that they would have done this, though... I know that when 3E came out, they allowed a third party to create the game "Hackmaster" using the 2E rules, but that product really didn't have a snowball's chance in Baator of posing a serious challenge to 3E (and was out of print fairly shortly thereafter...), whereas Pathfinder could grab a sizeable portion of disgruntled D&D players who don't like 4E. Remember "New Coke" a while back? How a lot of people didn't like the new formula? Imagine that after creating "New Coke", the Coca-Cola company had given the formula to "Classic Coke" to the Pepsi company and allowed them to sell it under a different name! What do you suppose would have happened...? I don't understand law very well (where's a Guvner when I need one?), so this business of unrevocable licences is beyond me. I thought if you created a thing you controlled it? Go figure... how backwards compatible IS Pathfinder? Can we use our 3.5 Monster Manuals with it...?
Oh, and ONE more question... do character classes still require that you be of a certain alignment (i.e must be Lawful for Monk) in Pathfinder? Have they loosened that up any?
Not shortly, it was in print for a few years. And WotC let KenzerCo do that so that KenzerCo wouldn't sue them over the reprinting of Knights of the Dinner Table in the Dragon Magazine Archive without their permission, as TSR at the time had only gotten a contract for a single printing in the original magazine with no reprint rights. They weren't the only folks really angry about that (pretty much every single author that had an article in any issue of Dragon from #1 to #250 that wasn't actually an employee of TSR had their piece reprinted illegally), but they were the ones most able to bring actual legal action against Wizards, so they got the license to 1e (not actually 2e) as a settlement of sorts. That license was only for a limited duration, though, and Wizards obviously wasn't eager to renew it, thus why it was forced out of print last year; they're working on a new, non-satiric system as a new edition, though.
You do, but you also have the right to waive your copyright if you want. If you create a creative work, you can do whatever you want with it and other people can't do anything without your permission. But once you give that permission, once you decide to make part of it freely available, there's no going back legally unless your license says you can. And the 3e OGL explicitly says Wizards cannot do that. It's essentially like they waived their right to revoke the license.
Wizards' goal in doing this at the time was to prompt more third-party products, and thus increase the popularity of D&D. And it worked, there were tons of third-party products and yet the Wizards' official books still sold quite well. But in 4e now, the 4e SRD is much more restrictive. You can't quote the books, you can't make reference to page numbers, you can only refer to abilities and classes and whatnot by name. You can't redefine anything you can legally use the name of, and if Wizards changes their product, you have to change your product similarly or you are no longer allowed to print it. Essentially, the 4e OGL-equivalent (I can't remember the new acronym for it, but I think it's SGL?) is designed specifically so no one actually wants to use it, which is a huge shame.
The goal is for itto be 100% backwards compatible with all WotC printed products. They're scaling up the power of the base classes and races in order to make things more balanced compared with the power creep in later products (they can't scale down the later products instead because those are not open game content, so they can't reprint them) and they're fixing the more blatant rules problems in 3.5, such as the horribly unbalanced nature of Polymorph, the complicated system necessary for Grapple, the annoyance of "unwinding" your characters for level drain, and the like.
As for alignment restrictions for class, yes, they are still present. The only things they changed were changed in order to improve rules problems or increase the power of things in order to match later supplements. But hey, it's D&D, if you don't like it don't use it. I know tons of D&D players that have dropped alignment entirely.
Also, even though Pathfinder can't actually refer to large parts of the D&D cosmology, it might hearten you to know that Paizo pulled on Monte Cook as a rules advisor. If you don't know him by name, he was one of the writers for Dead Gods, Faction War, Planescape MC3, Tales from the Infinite Staircase, Great Modron March, and the 3e DMG among many other products under both TSR and Wizards, as well as a number of third party products including Beyond Countless Doorways, the third edition "Planescape reunion" product that also featured a half-dozen other Planescape writers and artists. He's not the only big name in D&D working on the system (Erik Mona, a huge name in the online Greyhawk community and one of the writers of the Living Greyhawk Gazetteer, is Paizo's EiC for one), but he's the most Planescapey one, as far as I know.
That and I know the writer and designer for much of their cosmology - a fellow by the name of Todd Stewart... aka Shemeska the Marauder on these (and other) boards. For some strange reason I suspect Pathfinder's cosmology is in good hands. 
I also own a Pathfinder handbook and look forward to whatever planar material is coming from Paizo. We're expecting -- well, I am, at any rate -- that whatever changes are necessary, the flavor and mechanics of Planescape will need little conversion from our 3e setup here, and what will be needed should be not too difficult or disruptive of the story material.
That's Shemeska? Oh, wow, that's pretty awesome, I've seen his posts all over here and (I think) on ENWorld and Wizards. I'm really glad to hear that.
I can confirm that. I switched my Planescape campaign over to Pathfinder the day the first Alpha came out, and I haven't run into a single problem yet. Even the PSCS works just fine with it still; maybe I'll have to do some tiny tweaks to get the two to mesh down the line, but so far I haven't even had to do that much, the two have worked fine together right out of the box.
Does anyone know whether their campaign setting is any good? And what kind of flavour does it have?
Golarion's a great setting, from what I've seen. It's extremely flavorful, and the amount of detail that's gone into every major city is really impressive. Not just surface stuff that PCs would be guaranteed to notice, but NPC and location backstories that are all interconnected at a deep and realistic level, and a great history to it. In terms of what sort of setting, it's vaguely reminiscent of Greyhawk, in that it doesn't have much you wouldn't expect a fantasy setting to have, it doesn't suffer from uber-NPC syndrome like FR, there's a lot of work that's gone into political interactions behind the various countries and city-states, and things are fairly well thought out.
They've done some interesting things with the standard races too. Goblins are vicious, fear-inspiring, dog-hating creatures that children are told horror stories about to keep them in line. Gnomes are races with a deep internal curiosity and a vague connection to the fey, something like the connection kobolds have with dragons. Ogres are nasty inbred brutes that lurk in the hills in an admitted slight homage to horror-leaning hillbilly film portrayals. And what they've done with the drow is just cool, though I'm hesitant to go into detail on it since it's a fairly big spoiler for the current Adventure Path, and I'm new enough here that I'm not sure if this board has spoiler tags. :/
The history is slightly cliched in that they went with the standard "ancient evil mage's empire that eventually fell," but it's based in a cool sort of arcane spellcasting equating the seven schools of magic with the seven deadly sins.
Overall, I'd say it's a little darker than most settings (as you could probably gather), but it's not nearly so dark as to be oppressive. It's not a pessimistic or cynical setting, it's just got touches to that end that go farther than some settings might. I'd definitely recommend checking out at least either the setting guide or the first issue of one of the Adventure Paths to get a better idea of the feel, if any of this sounds interesting to you. But it's certainly earned its ENnies, I'd say.
It's made of awesome and win. I'm biased of course... but seriously, the setting drips with flavor and has a lot of the elements of Greyhawk and FR that I adored (before WotC let one die a slow death and then raped the other).
I like it, bought all Pathfinder books, can't wait for the elven book, the planar and Osirion, hope it will be better than Mulhorand
Yeah, if they can fix energy drain/ability drain and polymorph so it isn't a pain, then they have a winner in my book. (Those issues are one of the reason I like 4E... no more recalculating stats every time you run afoul of a vampire or similar undead or ability-draining horror - just hit points. Yeah, maybe not as realistic, but easier.) 
Basic summary of the changes they made there:
- Energy drain: I'll just quote the Beta itself. "For each negative level a creature has, it takes a cumulative –1 penalty on all ability checks, attack rolls, combat maneuver checks, saving throws, and skill checks. In addition, the creature reduces its current and total hit points by 5 for each negative level it possesses. The creature is also treated as one level lower for the purpose of level-dependent variables (such as spellcasting) for each negative level possessed. Spellcasters do not lose any repared spells or slots as a result of negative levels. If a creature’s negative levels equals or exceeds its total Hit Dice, it dies. A creature with negative levels receives a new saving throw to remove the negative level each day. The DC of this save is the same as the effect that caused the negative evels."
- Polymorph: Basically, they split it up into a bunch of subspells, with the original Polymorph spells now described as doing some combination of these spells. Eachsubspell transforms you into a specific type of creature, but rather than becoming that actual creature, each subspell has a list of abilities you can get. If the target has one of the abilities on that list, you get it. It also modifies your basic stats while you're in that form based on the type and size of the creature. So you're not an exact copy of the creature you're changing into, but you look just like it and have some of its abilities. This way, they can balance the polymorph spells against one another rather than having to balance every single monster in the entire game and all supplements against one another by CR.
Just got my copy Shemmy. Going to go through it tonight and will make a blog post here about my thoughts. Congrats on all your projects with Paizo.
Anything found in the SRD (http://www.d20srd.org/ for the pretty version, or http://www.wizards.com/D20/article.asp?x=srd35 for the official version) can legally be reprinted by any entity so long as they include the OGL text with the product, which in the beta is found on page 403 if you're curious. Certain parts of D&D, however, fall under the banner "product identity". For monsters, this encompasses the beholder, gauth, mind flayer, displacer beast, githzerai, githyanki, kuo-toa, slaad, and yuan-ti. These monsters cannot be reprinted in a third-party product, but any other monster from the Monster Manual is in the SRD as are the razor boar and scorpionfolk from MM2. No other monster can be included. The Great Wheel is also product identity, though the concept of a set of alignment-based Outer Planes are not, and those planar names specifically drawn from mythology are also allowed so long as the resulting plane isn't a total carbon copy of WotC stuff. The Elemental Planes are not product identity considering that the idea of a plane of air etc. is fairly generic. The Astral and Ethereal planes are specifically in the SRD. Any NPCs from a WotC product are product identity, but some of these are also mythologically drawn - Asmodeus for example - and therefore are generic enough to be considered public domain and thus can be included.
The rules in general for D&D are all entirely open game content, and unlike the 4e OGL-equivalent, any of these rules can also be replaced or rewritten, as you can see from Pathfinder. WotC cannot legally do anything, given the text of the OGL in section 9: "...You may use any authorized version of this License to copy, modify, and distribute any Open Game Content originally distributed under any version of this License." It's not even some legal loophole or something, this was the specific intent of WotC in creating the OGL in the first plac; they say as much outright in the OGL FAQ on their site.