They needed a low power, low cost, high performance video chipset for the
embedded market. The laptop-style chipsets where you got GMA900+ GPUs use
up much more energy then the Atom processor does.
So licensing the Powervr core was probably much cheaper then designing a
new one. Intel had licensed other GPU designs from those folks in the
past. I think for their old 8xx series chipsets had a older PowerVR design
derivative. So this is nothing new from Intel's perspective.
Keep in mind that this is a common problem with All embedded Linux stuff.
The Beagle Board and N900 use similarly licensed PowerVR. I don't know of
one ARM platform that has open source 3D graphics.
So if there was a actual open source driver then it would be fantastic as
it could provide a common code base for many devices on multiple
architectures. But, alas, it does not seem like the PowerVR folks are
interested in it.