We were discussing this in the FlickrCentral thread and below this is what I wrote about the whole thing (though, I will admit, it is moot considering there is not a bill anyway):

I am still on the fence about this whole issue. From the looks of it, it sounds like an attempt at copyright reform and free images that are basically orphaned. It allows people to create derivatives without being sued for infringement.

However, this Orphaned Works Bill does not address Fair Use or recognize the supremacy of free speech rights. It burdens the Fair User with the task with "reasonable diligent search" even before they attempt to create a derivative. The bill will in effect create regulation on fair usage and speech. It is an unfair, it is dangerous, it is the Copyfascist Trojan Horse.

Unless they create language that will explicitly recognize fair usage and add language that explicitly protect free speech, this bill is nothing but another straw on back of the already broken Copyright Act.