It's an interesting idea, to be sure, and if you listen to the people who had it (in our interview with them), it's a great idea. Instead of worrying about the vagaries of forum feedback and CM involvement, the devs are really hoping to have the game really run according to player concerns, allowing "emergent behavior" to appear on a vast scale. But there are lots of problems that could easily arise -- as James says, the players' roles aren't too specifically defined, so what if they decide to ban a corporation from the game, or purposely unbalance the economy?
And of course there's the base problem which is that even if you do want players having a solid voice in how your game runs and plays, is the route of player-based elections really the way to go about it? The PDF linked from KTR goes through some of these ideas, and basically suggests that EVE started as a hunter-gatherer game, then became a tribal game, and now, players need to band together as a universal whole in order to keep the economy going, and setting up this council is the best way to go about doing that. And they say that the council will be held accountable not just to CCP, but that the player council's actions will be judged by the players themselves. If the council makes a bad decision, it's up to the players to settle things.
Extremely fascinating stuff -- CCP basically wants to take EVE from being just an economic simulation into simulating an actual galactic civilization. As our interviewees said, no other game might have the ability (or the interest) to pull this off, so we'll have to watch and see what happens when CCP tries to put the power directly into players' hands.