The protection plan offers a one time replacement for any retail K and X SKU processor in conjunction with the regular 3 year warranty even if you ran the CPU out of spec. For example, for $25 USD, you can buy the protection plan for your retail Core i7-2600K processor that you plan to overclock in your new gaming system. If your processor fails to work due to something like overclocking or over volting in that 3 year period, Intel will replace the processor one time. Avid overclockers without the plan should consider this as it's becoming increasingly easier to spot "out of spec" processors.
There are a few things to keep in mind found in the FAQ. The plan does not cover any other components like the motherboard or memory should they fail, only the processor. Regular warrantied processors that fail will be replaced under the 3 year warranty. And, you can't purchase more than one plan per processor or for OEM or engineering samples. (DOH!)
Could we see the protection plans covering other Intel products in the future? That's a possibility for their future.