I personally don't think the E-passports are an out of line requirement. I might be a little biased here because I am from a country that does produce them but I still don't think it is inappropriate of the US gov to request gov. documents that are valid on face value ie. without the need to run multiple checks with your embassy to see if your passport number matches the one thats on file.

Other than that, I think this is pretty good news. It would be nice if there was a mention of the Dream Act though.