Walker also says that this is a model that specifically fits the multiplayer game at this moment in the product's life, when Valve is trying to reach as many players as it possibly can. The permanent price drop won't affect development on the game at all, but monetization will only go through the game's item shop. You can read more in the interview, live now over at Develop.
There's no official word on any of this from Valve yet, on either the Steam blog or the official Team Fortress 2 site. We are scheduled to hear about the next update today (and even see a "Meet the Medic" video) and the game was set to go free for just a week, but this is obviously a more permanent direction. We've contacted Valve and will post more here when we get it.
Update: Valve's Doug Lombardi has responded to us with a simple confirmation: "Yep." Enjoy your free TF2, kids!
Update: The site has been updated as well. The game's completely free to play, forever!