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I haven't had a chance to play with the feature too much yet, but I put in a few routes and I don't have any complaints so far. (Cyclelicious has noticed a few interesting things, like the fact that it factors in road grade when calculating how long a trip will take.) There are several other options for finding bike routes in Chicago: Ride the City, which I wrote about when it launched here last year; CitySpokes; and of course the City of Chicago Bike Map, which isn't interactive but I still think is one of the best resources out there (not least because it also comes in a paper form that you can bring along on your ride). Each has its advantages, but I have a feeling I'll end up using Google's bike mapping service the most just because I use Google maps so often anyway. Usually if I'm going somewhere new I put the address in Google maps, and if I don't know a good bike route there, I check the City of Chicago's bike map to find one. I might keep checking it for a while until I'm sure the Google bike routes are reliable, but I'm guessing I'll be able to start skipping that step pretty soon.
Update: Bike Snob NYC has also weighed in on the new feature, and on the antics of clueless reporters (h/t Philip). And he's right: use some common sense, people. If Google Maps tells you to bike somewhere that you clearly shouldn't be biking, it's a sign that there's a flaw in the program, not that you should try it anyway.