When you have a touch device attached, you get a screen keyboard for typing provided by the OS.
Also, yes if you try to use something other than direct manipulation, it's like puppeteering.
Our focus for touch was the broad gestures first, like being able to scroll and zoom. Since doing that I haven't had to grab the mouse to scroll or zoom and the experience is so much nicer because of that.
We also went further and implemented multitouch so in the console you can manipulate as many faders as your touch device supports.
Tip: when shopping for a touch monitor, run mspaint and try to see how many lines you can draw at once. Some external displays only support 2 touch points. Some of the ultrabooks support 5. I recently saw an all in one pc that supported 10 touch points. I believe the Planar model mentioned supports 20 touch points so you can work with a friend.
Look for details on touch/gestures/etc. soon on our blog.
Keith